OECD Inflation Soars... Highest Rate in 12 Years

April Consumer Price Inflation Rate 3.3%... BlackRock CEO "Rapid Price Surge Could Cause Major Shock"

[Asia Economy Reporter Park Byung-hee] Inflation in major advanced countries has soared to the highest level in over 12 years.

According to the Wall Street Journal (WSJ) on the 2nd (local time), the consumer price inflation rate for April among 36 member countries compiled by the Organisation for Economic Co-operation and Development (OECD) was 3.3%, the highest since October 2008.

OECD member countries account for more than 60% of the global economy. This is interpreted as a growing risk of inflation worldwide.

The inflation rate in April surged by 0.9 percentage points compared to 2.4% in March. CNN noted that the inflationary trend is steepening and interpreted the sudden inflation as a variable affecting the economies of major countries recovering from the COVID-19 phase.

Larry Fink, CEO of BlackRock, the world's largest asset management company, warned that the sharp rise in prices could deliver a significant shock to financial markets. At an online event hosted by Deutsche Bank on the same day, CEO Fink pointed out that prices had been declining for over 30 years, and since most investors currently have no experience with inflation, the sharp rise in prices could be a major shock.

Larry Fink, CEO of BlackRock [Photo by Reuters]

However, the OECD viewed the current surge in prices as temporary. The significant rise in the inflation rate in April is attributed to the base effect.

In April last year, just after the declaration of the COVID-19 pandemic, commodity prices plummeted. Currently, prices of major commodities such as copper and iron ore have more than doubled compared to that time, reaching record highs.

Therefore, the OECD expects that the base effect will disappear by the end of the year, and the inflation rate will stabilize. The energy price inflation rate among OECD member countries in April was recorded at 16.3%, compared to 7.4% in March.

Meanwhile, the OECD announced that the inflation rate in April for the Group of Twenty (G20), which accounts for 80% of the global economy, was 3.8%, the highest in over a year. This is an increase of 0.7 percentage points from March.