Inflationary pressures from oil on consumer prices could peak soon when standard year-on-year measures will show the greatest increase, said economist Ellen van Gulik of JP Morgan in London.

But by this time next year, oil prices might well register a year-on-year decline.

``That year-on-year increase will peak at about 100 per cent early next year for Europe but after that, unless oil prices rise further which seems unlikely, oil will be a very favourable factor for inflation,'' said Van Gulik.

Oil slumped to a low of just $10 a barrel for Brent blend crude on an average in December of last year. Since then OPEC supply curbs have lifted the international benchmark to $24 a barrel.

Van Gulik said that for every 10 per cent increase in the global oil price, measured in euro terms, energy prices in Europe's CPI rise by about one per cent. Given the weighting of energy in the European CPI that adds about one-tenth of a per cent to headline consumer price inflation.

The year-on-year change in oil prices for November looks set to register about an 80 per cent change, enough to add 0.8 per cent to Europe's consumer price indices.

``We forecast that oil price inflation in euros, growing at 100 per cent year-on-year at the start of next year, to be at roughly minus 10 per cent at the end of the year. That gives you a very big impact on CPI, about a one per cent fall by the end of the year, as a result of oil prices,'' said Van Gulik.

The secondary impact of oil's rise on core industrial goods and services, which typically lags by nine months, will sustain inflationary pressures for that sector until later next year.

``It is pretty clear that core goods prices, given what we're now seeing on oil, are going to rise. Core goods prices inflation in the euro area now is up 0.4 per cent on a year ago. We're going to be up about one per cent in the middle of next year,'' Van Gulik added.

In the United States, where tax and duty are a much smaller proportion of end-user prices, year-on-year changes in oil prices have a bigger impact on headline inflation.

Jens Uwe Waechter of Deutsche Bank in Frankfurt estimated that a 10 per cent rise in oil prices adds about 0.25 per cent to the consumer price index.

``There is a lot of tax on gasoline and heating oil in Europe that you don't have in the United States,'' he said.

Tax and duties represent less than 40 per cent of consumer petroleum product prices in the US compared to about 75 per cent in Europe, Waechter estimated.

In Japan, the steady rise of the yen this year has helped offset the impact of rising dollar-denominated oil prices.

And with Japan more concerned about deflation than inflationary effect of higher oil prices is probably seen as positive for the economy as a whole.

For the rest of Asia, a continent that imports two-thirds of its crude needs, high oil prices are nothing but bad news.

``It's very difficult to interpret higher oil prices as a positive in any way. They act as a brake on growth. High oil prices are holding back the process of recovery,'' said managing director of Petroleum Economics in Bangkok, John Russel.