Why has inflation hit the US more than Europe?

[Anonymous]

Anonymous wrote:

Anonymous wrote:According to all the data, inflation is higher in Europe than the US--has been slower to go down than the global inflation connected to the pandemic.

What you are pointing to is the effect of different cost of living (which varies widely across European countries/cities) and the effect of a strong US dollar, not anything to do with inflation (which as an outsider you wouldn't have a sense of because it's how much prices have gone up compared to prior times in the local currency).

Incorrect. Inflation currently is higher in the US at 3.3% than in the EU, where it is 2.9%. UK is higher at 3.3%.

https://tradingeconomics.com/country-list/core-inflation-rate

The problem with the data here is the calculations are done differently. The big difference is the way the US calculates housing inflation, owner occupiers housing costs. It’s making inflation look much higher (and it's weighted about a third of the CPI).

Not saying the way it’s done here is wrong, but it is different. If you compare same vs same then you get a different result. Always need to be careful with data interpretation.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:According to all the data, inflation is higher in Europe than the US--has been slower to go down than the global inflation connected to the pandemic.

What you are pointing to is the effect of different cost of living (which varies widely across European countries/cities) and the effect of a strong US dollar, not anything to do with inflation (which as an outsider you wouldn't have a sense of because it's how much prices have gone up compared to prior times in the local currency).

Incorrect. Inflation currently is higher in the US at 3.3% than in the EU, where it is 2.9%. UK is higher at 3.3%.

https://tradingeconomics.com/country-list/core-inflation-rate

The problem with the data here is the calculations are done differently. The big difference is the way the US calculates housing inflation, owner occupiers housing costs. It’s making inflation look much higher (and it's weighted about a third of the CPI).

Not saying the way it’s done here is wrong, but it is different. If you compare same vs same then you get a different result. Always need to be careful with data interpretation.

It’s called the harmonized CPI and it’s at 1.8% for all items, instead of 2.9%. Not sure what just the core number would be harmonized.

[Anonymous]

Anonymous wrote:Farmers in the EU are heavily subsidized so the price of actual groceries are cheaper. Also, salaries are lower so restaurant prices are lower. Add to that a very favorable exchange rate for the U.S. and it can seem cheap to us. But compared to European salaries, it’s not cheap.

This. Europeans are relatively poor. Mississippi has a higher gdp per capita than all but a handful of European countries and the gdp per capita for the UK is roughly the same as Mississippi (the poorest US state).

[Anonymous]

Must be where you live. I got one scoop of ice cream in a sugar cone in suburban MD (Baltimore County) and it was maybe $3.50 or $4 max. I thought that was a lot but it definitely wasn’t $6 or $7.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Important to point out that a massive driver of EU inflation was the Ukraine war and huge energy costs. In contrast, the US actually benefited from the war.

Economically? How so?

The US military industrial complex is booming.

[Anonymous]

https://twitter.com/billprady/status/1824561989030707477?s=46

[Anonymous]

Anonymous wrote:https://twitter.com/billprady/status/1824561989030707477?s=46

So the answer is it hasn’t.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Important to point out that a massive driver of EU inflation was the Ukraine war and huge energy costs. In contrast, the US actually benefited from the war.

Economically? How so?

DP. Massive US exports of oil and natural gas to replace lost supply from Russia, for one.

[Anonymous]

American corporate greed and shareholder expectations, with low government regulation.

Companies took the Covid excuse to raise prices as much as they could get away with without decreasing demand for their product.
Also once the few top companies started cutting their workforce 10%, almost all the Fortune 500 companies took the opportunity to do the same.
Result- record corporate profits and stock market performance for last 3 years

[Anonymous]

Anonymous wrote:American corporate greed and shareholder expectations, with low government regulation.

Companies took the Covid excuse to raise prices as much as they could get away with without decreasing demand for their product.
Also once the few top companies started cutting their workforce 10%, almost all the Fortune 500 companies took the opportunity to do the same.
Result- record corporate profits and stock market performance for last 3 years

Corporate profits have not outpaced actual inflation. The value of the money is dropping rapidly due to inflating the money supply since 2008. If corporate profits weren’t “up” then profits would be in the toilet adjusted for inflation.

[Anonymous]

Government confiscatory revenues are at record highs and causing higher prices to pay them.

[Anonymous]

Anonymous wrote:Inflation was a lot worse in Europe in the last few years, but the baseline was different. The things you mention were already a lot cheaper in Europe before inflation. Grocery prices have risen tremendously in Europe, by larger percentages than here. But the baseline was already a lot cheaper than US, so it is still cheaper. And comparing bakery prices...there is so much competition in France for fresh baked goods, with a boulangerie on every block in addition to grocery stores. There are price wars on bread among the major chains, because it gets people in the door to make other purchases. Americans don't care about bread or croissants. They are frivolous purchases, not staples.

Exactly. You have to compare to previous prices there, not current prices here. Seriously, OP.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Farmers in the EU are heavily subsidized so the price of actual groceries are cheaper. Also, salaries are lower so restaurant prices are lower. Add to that a very favorable exchange rate for the U.S. and it can seem cheap to us. But compared to European salaries, it’s not cheap.

This. Europeans are relatively poor. Mississippi has a higher gdp per capita than all but a handful of European countries and the gdp per capita for the UK is roughly the same as Mississippi (the poorest US state).

Interesting. I had to look that up and compared the different countries of Europe to Mississippi. I had no idea.

[Anonymous]

Anonymous wrote:American corporate greed and shareholder expectations, with low government regulation.

Companies took the Covid excuse to raise prices as much as they could get away with without decreasing demand for their product.
Also once the few top companies started cutting their workforce 10%, almost all the Fortune 500 companies took the opportunity to do the same.
Result- record corporate profits and stock market performance for last 3 years

In the Bull markets most of the mast 15 years, stocks have been growing at the same rate since 2009 after the previous crash, and had a crash 2.5 years ago. There is no "record stock market performance for the last 3 years"

https://www.macrotrends.net/2324/sp-500-historical-chart-data

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Farmers in the EU are heavily subsidized so the price of actual groceries are cheaper. Also, salaries are lower so restaurant prices are lower. Add to that a very favorable exchange rate for the U.S. and it can seem cheap to us. But compared to European salaries, it’s not cheap.

It depends on how you count. Aggregating over millions of people is hard.
When factoring in inequality and Purchasing Power Parity adjustments, median people in UK are 20% richer than median Mississippians.


This. Europeans are relatively poor. Mississippi has a higher gdp per capita than all but a handful of European countries and the gdp per capita for the UK is roughly the same as Mississippi (the poorest US state).

Interesting. I had to look that up and compared the different countries of Europe to Mississippi. I had no idea.