The U.S. and Europe Have Different Inflation Problems

Leo Tolstoy’s observation that “all unhappy families are unhappy in their own way” applies to decades of high inflation experienced by countries around the world. Headline inflation figures are becoming increasingly similar – around 8% in the US and Europe – but the causes, consequences and treatment remain quite different. The US in particular has higher underlying inflation – which may be more persistent and appropriately addressed with aggressive monetary tightening. In contrast, a larger part of European inflation is imported – making it more painful than US inflation, but also likely more transitory, and hence the European Central Bank’s response should be comparatively dovish.

The US has seen cumulative inflation around 3 percentage points higher than the eurozone since the start of the pandemic. But inflation peaked in the US in March and is likely to drift lower, while inflation rates in Europe have risen. In the first four months of the year, inflation in Europe rose by 12% on an annualized basis, compared to 9% in the US The U.S. and Europe Have Different Inflation Problems

Alley Einstein is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Related Articles

Back to top button