Yearly inflation in OECD area falls to 1.8 percent in September

PARIS, Oct 2, 2007 (AFP) – Annual inflation in the 30 industrialised members of the OECD fell to 1.8 percent in the year to August from 2.0 percent in July 2006, the Organisation for Economic Cooperation and Development said Tuesday. In Japan, prices were down by 0.2 percent in August compared with a year earlier after no change in the 12 months to July. The consumer price level was down 0.1 percent in August after registering no change in July.

The report came two days ahead of meetings of policymakers at the European Central Bank and the Bank of England. The ECB is widely expected to maintain benchmark interest rates at current levels as signs of a slowdown in the 13-nation eurozone emerge.

In the United States the Federal Reserve last month cut its base target rate by half a point in a bid to galvanize monentum in the US economy.

Traditionally a rise in inflation would encourage central banks to tighten their monetary polices by raising interest rates.

But in the OECD area, consumer prices for energy fell 1.3 percent in annual terms in August compared with a rise of 0.8 percent in July. Food prices gained 3.2 percent year-on-year in August after a rise of 3.3 percent in July.

Excluding food and energy cons