Rising energy prices confirmed the developed world's emergence from a period of deflation in November, but the prices of most goods and services rose at a slower pace.
Rising energy prices confirmed the developed world's emergence from a period of deflation in November, but the prices of most goods and services rose at a slower pace.

The world's developed economies emerged from a four-month brush with deflation in October, a further indication that the global economy is in recovery. And prices were once again higher than the same month last year in November.

Figures released by the Organization for Economic Cooperation and Development Thursday showed consumer prices in its 30 members rose by 1.3% in the 12 months to November, having risen by 0.2% in the 12 months to October.

Between June and September, developed economies experienced their first collective episode of deflation since the OECD began compiling data in 1971, a testament to the severity of the global financial crisis and the recession it engendered.

However, the return of inflation is unlikely to lead to an immediate response from the world's leading central banks, which are likely to keep their key interest rates close to record lows for many months to come.

That's because there is no sign of the emergence of broad-based increases in prices.

Falling energy prices were the main driver behind the developed world's brush with deflation, and rising energy prices have been responsible for the return to inflation.

In the 12 months to November, energy prices rose by 2.4%, having fallen by 9.2% in October. That was offset slightly by a larger fall in food prices, which were down 1.1% on November 2008, having fallen by 1.0% in October.

Throughout the period of deflation, prices of goods and services other than energy and food continued to rise. But there is no sign they are rising at a more rapid pace. Indeed, core prices were up 1.5% on the year in November, having risen by 1.6% in October.

Some smaller central banks have already begun to raise their key interest rates in anticipation of rising inflationary pressures as the global economy recovers, including the Reserve Bank of Australia, the Bank of Israel, and Norway's Norges Bank.

A number of OECD members continued to experience deflation in November, including Belgium , Finland , Ireland , Japan , Portugal , and Sweden .

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