July 5, 2022

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US inflation has risen to 40 years, and it is not just Putin's fault

US inflation has risen to 40 years, and it is not just Putin’s fault

A New York taxi driver looks at the pump with some concern, as petrol prices are almost half higher than last year.Image AP

The Bureau of Labor Statistics said Tuesday that prices in the United States have not risen sharply since December 1981. The main explanations for this are high energy and fuel prices. Petrol prices are 48 percent higher than the previous year, while energy prices are 32 percent higher.

The White House blames rising prices on the war in Ukraine; President Joe Biden has always called for inflation. “Putin’s price riseHowever, the United States is not indebted to this inflation: the prices of all kinds of goods and services have been rising since the beginning of 2021. After the corona epidemic, activity increased rapidly, resulting in the supply of goods and services not always being able to meet demand, resulting in shortages and higher prices. This did not help the supply chain to disintegrate after the infection.

Major inflation

In recent months it has become clear that the American business community is sending these costs directly to consumers. Inflation can be seen not only by higher energy prices, but also by the difference between inflation (8.5 per cent) and core inflation, which is the percentage that excludes energy and food prices. Even without these volatile commodities, US prices were up 6.5 percent in March from a year earlier.

The effects of the Ukraine war are being felt in Europe as well. In March, the Netherlands experienced 11.9 percent inflation, mainly due to higher energy prices. But without energy and food prices, inflation was at 3 percent. So it seems that the companies here are not fully paying the high costs to the customers at present.

All eyes are now on what the central banks are going to do to curb inflation. In the United States, the Federal Reserve has begun to raise interest rates systematically and is preparing to reduce its portfolio of government and corporate securities. The European Central Bank is far from it. For now, Frankfurt will continue to buy instead of selling credit paper. The ECB does not expect to raise interest rates for the first time until the end of this year.

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