The aim of this thesis is to study the effect of income inequality on inflation rate in countries of OECD. I analyze the effect of income inequality, measured by the Gini coefficient, on inflation with a panel dataset comprised of 29 OECD countries over the period 2004 - 2013. The dataset was obtained from OECD statistics database and Eurostat database and include independent variables that were found statistically important from previous surveys as well as the Gini coefficient. The dependent variable is the Annual Inflation measured by CPI. We use several regressions to test this association. One for the entire set of data and four other for countries with low and high Gini coefficient and for high and low GDP Growth. With the help of regression analysis, I find evidence supporting the view that there is not a correlation between those two variables for any regression, while the other inflation determinants are generally in accordance with previous results.