The Organization for Economic Cooperation and Development (OECD) in April 2022 published its February 2022 inflation statistics, confirming their acceleration. Year-on-year inflation in the OECD area rose to 7.7% in February 2022, compared with 7.2% in January 2022, and 1.7% in February 2021.

This increase reflected in part another sharp rise in inflation in Turkey, increasing from 48.7% in January to 54.4% in February. Excluding Turkey, inflation in the OECD area rose to 6.3%, following a rate of 5.8% in January 2022.

While energy continued to be a key driver globally, food price inflation also showed a notable increase. Excluding food and energy, year-on-year inflation in the OECD area increased to 5.5%, after 5.1% in January 2022.

Year-on-year inflation was stable in China and South Africa while it decreased in India.

Until now, the current surge in inflation was driven by energy and food prices. Not so anymore. In fact, inflation excluding food and energy was the main driver of overall inflation in Canada, Germany, the United Kingdom, and the United States, while energy remained the main contributor to inflation in France and Italy.

As a comment, we may be witnessing the beginning of an inflationary snowball effect.

Directly or indirectly, energy and food prices are contributing to rising input costs, which are beginning to translate into widespread price increases for goods and services. As we can already see in the news, this is leading to increased wage demands which will inevitably lead to an acceleration of inflation, as companies will not be in a position to significantly cut their profit margins in the current context of rising interest rates and risk premiums.

An inflationary spiral cannot be ruled out, which is why one must consider the potential ramifications for insurance carriers, even if the latter may not be in a position to fully hedge against it.

OECD’s press release with more details and graphs can downloaded here.