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The OECD has warned that the global recovery from the pandemic remains uneven, as it is raising its inflation forecasts following the surge in commodity prices.

In its latest economic outlook, the Paris-based group warned that a rapid increase in demand with the reopening of economies has pushed up the cost of key commodities such as oil and metals.

Food prices are also on the rise, pushing up prices especially in emerging markets, with tensions in the supply chain increasing cost pressures and sharply rising shipping costs, according to the report.

Thus, the OECD has raised its inflation forecasts in the group of G20 countries this year to 3.7%, from 3.5%, and for 2022 to 3.9% from 3.4%.

The UK inflation rate is now estimated at 2.3% this year (up from 1.3% in May) and 3.1% in 2022 – above the Bank’s 2% target from England.

The OECD says the outlook for inflation “varies considerably”, having risen sharply in the United States and some emerging market economies, but remains relatively weak in many other advanced economies, particularly in Europe.

Headline consumer price inflation has also accelerated around the world in recent months, driven by rising commodity prices, supply side constraints, stronger consumer demand as markets reopen. savings and the reversal of some sectoral price cuts in the early months of the pandemic.

Annual inflation has reached over 5% in the United States, but remains at relatively low rates in many other advanced economies, notably in Europe and Asia.

Some of the current rise in inflation reflects base effects, following the drop in prices at the start of the pandemic. In many emerging market economies, high energy and food prices have pushed up inflation, reflecting both sharp price increases and the relatively high share of commodities in consumer spending.

These inflationary pressures should eventually subside, he adds:

Once the bottlenecks are resolved, price increases for durable goods, such as cars, should ease quickly as supply from the manufacturing sector picks up quickly.

Consumer price inflation in G20 countries is expected to peak towards the end of 2021 and slow through 2022. Although significant wage increases are occurring in some sectors that are reopening, such as transport, recreation and in the hotel industry, overall wage pressure remains moderate.

The OECD says the global economic recovery remains strong, aided by government and central bank support and immunization programs.

But while global GDP has now exceeded its pre-pandemic level, the recovery remains uneven, as countries emerging from the crisis face different challenges, he warns.

He now predicts that global GDP will grow 5.7% this year, down from 5.8% forecast in May, after declining 3.4% last year. Growth in 2022 was increased to 4.5% from 4.4%.

He reduced his forecast to UK growth this year at 6.7%, from 7.2%, and for 2022 from 5.5% to 5.2%. The we growth forecasts this year have been reduced from 6.9% to 6%, but fell from 3.6% to 3.9% next year.

Forecasts for eurozone this year’s growth was increased by a percentage point to 5.3%, followed by 4.6% next year (from 4.4%).