The international environment

• Growth in the Group of Seven countries continued to be robust in the second half of 1994. The US economy grew strongly; in the third quarter, consumption strengthened in continental Europe—particularly in western Germany—and in Japan, the recovery broadened.
• Non-oil commodity prices rose by around 25% between 1993 and 1994; oil prices fell by 7%. Producer price inflation is rising in a number of OECD countries.
• Despite stronger growth and rising raw material prices, annual consumer price inflation in the G7 countries was lower towards the end of 1994 than at the beginning.
• In response to potential inflation pressures, official interest rates were increased further in a number of countries—mainly those which have been recovering longest.

The international environment