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Inflation: 2 different stories for US and Europe

Sep 21, 2023

All eyes were yesterday on the Fed as it decided to leave rates unchanged and will now “proceed carefully”. Meanwhile on the Old Continent, inflation is set to be coming down. Germany’s Producer Price Index, or PPI — for August tumbled at the fastest rate since 1949! We agree this sharp downward trend was mainly due to energy prices slumping by 31.9 percent during the course of the year and this will change again. However, even with energy stripped out, producer prices rose only by 1.2 percent year-on-year during August. The price of intermediate goods was 4.1 percent lower in August than a year earlier. Germany has lost its economic shine as its export driven economy experiences a heavy blow from the slowdown in the world trade due to deglobalization, higher rates and its structurally heavy energy dependence on cheap Russian gas. Same inflation fear: 2 different stories for the US and Europe.

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