Inflation in the Group of 20 largest economies, which account for most of the world's economic activity, fell for the fourth straight month in May to its lowest level since August 2016, the Organization for Economic Cooperation and Development said Tuesday.
Figures also released by the Paris-based research body showed that inflation across developed economies fell for the third straight month and to its lowest level this year.
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The decline in inflation rates around the world comes as some leading central banks have begun to contemplate a withdrawal of the stimulus measures they have put in place since the financial crisis.
In speeches last week, European Central Bank President Mario Draghi, Bank of England Gov. Mark Carney and Bank of Canada Gov. Stephen Poloz signaled it may soon be time to consider a reduction in their support for economic growth.
Of those three, only Mr. Carney is confronting an inflation rate above the 2% target shared by most developed-country policy makers. But while the U.K.'s inflation rate rose to 2.9% from 2.7% in April, Canada's inflation rate fell to 1.3% from 1.6% and the eurozone's inflation rate fell to 1.4% from 1.9%.
Inflation also eased in the U.S., and one Federal Reserve official has warned that talk of tighter policy to come may be one cause of weakening expectations for future price rises.
"I think we have been overly hawkish, especially with regard to our future plans," Federal Reserve Bank of St. Louis President James Bullard said Thursday. "Because of that, markets are saying that, 'If you're going to be that hawkish, there isn't going to be much inflation.'"
Much of the volatility in inflation over recent years has been due to energy prices, which have played a similar role in 2017. Excluding prices of energy and food, the core rate of inflation in the OECD fell less markedly during May, to 1.8% from 1.9%.
While economists expect global economic growth to pick up this year after a disappointing 2016, one ingredient for a sustained rate of inflation at around the 2% targeted by developed-country central bank is still missing: an acceleration in wages.
Central bankers are puzzled by the sluggish pace of pay rises given continuing declines in jobless rates. But they believe that economic growth will ultimately eliminate the gap between what their economies can producer and what they are now producing, pushing up wages and prices.
Write to Paul Hannon at email@example.com
(END) Dow Jones Newswires
July 04, 2017 06:16 ET (10:16 GMT)