Gasoline, flights, rental cars but also groceries such as eggs, chicken, milk and butter have become significantly cheaper again in the USA. There are early signs that inflation has peaked there. Will the turnaround come to Germany with a time lag?
After almost a year of high inflation rates of up to 9.1 percent, prices in the USA stagnated again last month. In some areas, costs even fell significantly compared to the previous month.
Much to the delight of many consumers: the drop in prices is particularly noticeable at gas stations, with petrol becoming more than eight percent cheaper.
While a gallon (around four liters) still cost an average of $5.016 in June, the national average for gas is now $3.883. Domestic flights were also around 7.8 percent cheaper. And the costs for rental cars and hotel accommodation have also fallen.
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In the American supermarkets, price falls were most evident in the case of chicken: chicken breast cost almost 24 percent less in July than in the month before. Milk, butter, eggs, hot dogs and tomatoes were also noticeably cheaper.
And the chicken wings, so popular with many Americans, were even cheaper than before the pandemic, according to the Department of Agriculture. The last time chicken wings were as cheap as last month ($1.68 per pound) was in 2018 – according to forecasts, prices are expected to fall further for the time being.
Shortly before the start of the football season at the beginning of September, sports fans in particular are happy about the fall in the price of the popular wings, which many spectators see as part of a football game. Some restaurants are currently advertising their new, cheaper menus.
Nevertheless, economic experts warn against premature optimism. It is said that cost reductions over the period of a single month would not automatically lead to more price stability. More reliable forecasts are only possible when the trend stabilizes over several months.
“It’s still far too early for a victory dance,” said economist John Leer on US broadcaster CNBC. His advice: For the next one and a half to two years, consumers should be prepared for inflation to persist – even if the drop in prices at gas stations is particularly welcome.
“I think it’s good for the economy,” he said. “In the case of gasoline, inflation was huge and that is having an enormous impact on consumers and their consumption behavior.” The end of price increases in the USA could herald the fall in inflation – but also mark the weakening of the American economy, the economist analyses.
Natalia Beliaeva, a professor of economics from Boston, takes a similar view: “Many economists believe that inflation in the US peaked in June. With the falling petrol prices and an economic downturn, there were more moderate price increases in July,” she said in an interview with FOCUS online. “Nevertheless, I think it is premature to say whether this trend will continue. Because at 8.5 percent, the American inflation rate is still undesirably high.”
Her forecast for Germany: “The situation in Europe and especially in Germany is even more uncertain. Inflation there will probably continue to rise in the near future due to the Ukraine war and the lack of gas supplies from Russia.”
Since Germany, unlike the US, is dependent on oil and gas from Russia, inflation there could continue to climb. “And with the colder temperatures coming autumn and winter, demand for energy will continue to increase – which means that both energy costs and inflation are likely to remain high,” says Beliaeva.
The economic strategist Russell Seidle from the Suffolk University Business School agrees: “In Germany it will probably take a while before the situation relaxes and improves. The geographic proximity to the war and the energy dependency of the Germans could ensure that inflation lasts longer there than here.”
