World on the brink of higher inflation - OECD

In its semi-annual Economic Outlook, published on 24 May, the OECD urged all central banks except Japan either to raise interest rates or take their time before cutting them. The organisation said that it had identified "many signs of strong underlying global inflation pressures which could yet feed through into headline inflation".

These pressures reflected upward trends in several variables, according to the OECD, which included increases in commodity and intermediate industrial goods prices, and a rise in shipping costs and the price of food relative to other consumer prices across most OECD countries.

The OECD however added that the strong demand was a reflection of robust economic expansion. It has raised its growth forecast over its November projection for the OECD area by 0.2 points this year to 2.7% - a rate it expected to be maintained in 2008. "The current economic situation is in many ways better than what we have experienced in years," OECD chief economic Jean-Philippe Cotis said.