While inflation rose further in the Netherlands in July, the number actually fell in the US. Inflation in the US was 8.5 percent in July, up from 9.1 percent a month ago. The average inflation rate in the European Union is 8.6 percent, higher than the US average. According to BNR’s home economist Han de Jong, this is mainly due to energy costs.
‘The main difference between the US and Europe is gas prices,’ says De Jong. In Europe, the conflict with Russia and the dependence on Russian gas have caused huge increases in gas prices. In the United States, gas prices have risen at a slower pace. The price of electricity depends on the price of gas. In July, a Dutch household had to pay 117 percent more for electricity than a year earlier. In the US it is only 15 percent.
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Inflation seems to have peaked, says De Jong. “We’re in bad shape right now.” The question now is when the decline will start and how quickly the numbers will fall, says de Jong.
Exhibitors were delighted
Inflation peaking in the US is also creating gains in Asian stock markets. In Hong Kong, Shanghai, Seoul and Sydney, indicators were in gains. Markets are taking into account that the US Federal Reserve is more cautious about raising interest rates now that deflation appears to be easing.
Stock markets in New York also closed with solid gains yesterday.In the last two interest rate decisions, interest rates were raised by solid steps of 0.75 percentage points. Now that inflation has cooled somewhat, the central bank could raise interest rates somewhat more strongly at its next rate decision in September. “The central bank will continue to increase, but the pace will essentially slow down,” Han de Jong expects.
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