Page last updated at 21:46 GMT, Thursday, 5 June 2008 22:46 UK

OECD highlights inflation worries

The falling dollar will lift US exports, says the OECD

The Organisation for Economic Co-operation and Development (OECD) has said inflation remains a danger, as oil prices have shown a sharp increase.

The OECD statement came as oil surged $6 to over $128 a barrel on Thursday.

"Ministers were concerned about inflationary pressures and indications inflationary expectations may be drifting upwards," the OECD said.

They also said attention should be paid to fiscal balances, especially where inflationary pressures remained high.

The statement from the Paris-based organisation came at the end of a two day meeting in the French capital.

Rate rise?

On Thursday evening US crude increased by $6.08 to $128.38 a barrel, wiping out two days of losses triggered by worries that high prices may hit global demand.

And London Brent crude futures were $5.44 higher at $127.54 a barrel.

The price rises came after the dollar fell against the euro, following signals from European Central Bank President Jean-Claude Trichet of possible rate rises later this year.

Oil prices have continued to rise since hitting $100 a barrel in January, and on 22 May 2008 the price reached a new record of $135.

The increases have come as the supply of crude oil does not appear to have been keeping pace with demand as the Asian economies continue to expand.

It may also be partly due to speculators investing in the market in the belief that prices will keep on going up - while oil producers have slowed production to maximise profits.

Meanwhile the OECD also said that it believed that the recent surge in global food prices may be slowing.

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