Inflation Around the World: How Does the US Compare to Canada and the EU?

December 4, 2022

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12:43 am

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Inflation data from St. Louis Fed, chart by Mish

Credit for the chart idea itself goes to the St. Louis Fed. I downloaded the data and created my own charts to better hone in on the data.

Year-Over-Year Inflation Seven Countries Detail

The EU lags badly when it comes to reporting most data releases. Data for the above charts is only through September.

Key Points

Inflation in the US was the first to peak.
US inflation peaked in June at 9.06 percent and is currently (through September) at 8.20 percent.
Inflation in France peaked at the lowest rate, 6.08 percent.
France also has the lowest current rate of 5.55 percent.
Inflation in Germany is 9.99 percent and still rising
Inflation in Italy is 8.87 percent and still rising
Inflation in Spain was the highest peak so far at 10.77 percent
Inflation in the UK is 8.80 percent matching the July high.
Inflation in Canada peaked at 8.13 percent and is now 6.86 percent,

This post originated at MishTalk.Com.

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Addendum

The above image is from ECB Europa Stats.

I added those numbers to my charts. Here is the most pertinent update.

Mish

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This post originated on MishTalk.Com

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Webej

2 years ago

I’m sure EU statistics don’t yet reflect the new geometric weight of energy expenses.

Inflation is sure to keep going up as the percentage of the economy going to energy increases.

Plus, the data & methods is not congruent, so you’re never quite sure what official statistics mean, let alone comparisons.

vanderlyn

2 years ago

inflation in reality of our lives are raging. jobs are tight. a good thing. fed gonna hike for a long long time, unless we spin out of control. amerikans couldn’t handle hyper inflation. we are all poorer today than we were 3 short years ago due to 50 years of money printing in 2 covid plague years. just face that reality. much easier.

MarkraD

2 years ago

Reply to vanderlyn

“fed gonna hike for a long long time, unless we spin out of control.”

The economy doesn’t immediately react on Fed policy, it can take upwards of two years.

Knowing this, the Fed will look for signs of flattening inflation, starts of a down trend, they won’t wait for 2% to soften or reverse.

vanderlyn

2 years ago

Reply to MarkraD

one thing i am 100% certain of. you as do i, have no clue on timing. if you get direction correct we are all lucky. i’ve been under the impression since a year ago, the fed is serious. 50 years worth of printing currency in 2 years of plague. the fed is owned by the banks. they cannot let inflation go completely out of control. like latin amerikan style hyper let’s call that 100% per annum. the fed hasn’t had a rising rate environment like this since inflation of late 1960s to early 80s. we could easily have years and years of fed tightening and pausing and tightening……………mish has been very wrong on this. but so what. his r/e analysis has been dead on. like it was 15 plus years ago. i’m grateful for that. helped me sell at top last time, and buy at bottom and sell this year. i’m almost jinxing myself. my first experience with r/e was wonderful. i got crushed during S and L debacle of late 1900 and 80s, last century. first investment property i invested in i sold for a loss, thirteen long years later. a great experience. for the long term.

MarkraD

2 years ago

Reply to vanderlyn

…

Lisa_Hooker

2 years ago

Reply to vanderlyn

We always seem to become smarter, later.

Salmo Trutta

2 years ago

The very slow decline in inflation is because Powell eliminated required reserves. Velocity has been rising at the same time money has been falling.

Daniel L. Thornton, May 12, 2022:

“However, on March 26, 2020, the Board of Governors reduced the
reserve requirement on checkable deposits to zero. This action ended the Fed’s
ability to control M1. In February 2021 the Board redefined M1 so that M1 and
M2 are very nearly identical. Consequently, it makes little sense to
distinguish between them. In any event, the checkable deposit portion of M2
cannot be controlled now because there are no longer reserve requirements on
these deposits. Here is the reason the Fed cannot control these deposits.”

Some Thoughts About Inflation and the Feds Ability to Control It.pdf (dlthornton.com)

Money flows have risen largely as a result of deleveraging,
consumer downsizing, & continuing balance sheet restructuring. I.e., during
this process, the transactions velocity has risen because of dis-saving, where
e.g., interest-bearing accounts have been converted into transaction accounts. Velocity should reverse its trend in 2023.

MarkraD

2 years ago

Reply to Salmo Trutta

” …Powell eliminated required reserves.”

This has gotten far too little attention, as in 2008 when the big banks pumped oil prices in secrecy, which then spurred the start of sub-prime defaults.

(Bernie Sanders later leaked the info, proved oil prices @ $145 was the biggest banks doing, neither supply nor demand warranted that price at the time…at the same time many of the same banks were short sub-prime assets)

The regular market is regulated with limits on what % of a stocks market cap can be purchased or sold, but not futures/derivatives.

The Commodity Futures Modernization Act allows limitless futures and derivatives trading, this means any trading entity with enough buying power can manipulate commodities or softs, controlling input costs, which gives them the ability to know regular equity earnings in advance….and, they do not have to disclose their positions to the public.

I hate sounding “tin foil”, but this brings pause to question how much inflation was/is consumption based, and how much is speculative.

vanderlyn

2 years ago

Reply to MarkraD

speculators have always been a part of all markets throughout the ages. it’s not like they are NOT part of the market. whoever they are. banks, central banks. kingdoms funds. hedges……..or just run of the mill billionaires.

MarkraD

2 years ago

Reply to vanderlyn

“speculators have always been a part of all markets throughout the ages.”

No, not like this, banks can wield the power of trillions with the leverage they have.

If you have limitless buying power without constraints or oversight, you control whole sectors, perform a Hunt bro’s maneuver on any commodity and right before you withdraw, take positions in companies that are effected by that commodity price.

Lisa_Hooker

2 years ago

Reply to MarkraD

Sure, like the Hunt’s demonstrated.

If the PTB don’t like what a speculator/investor is doing, just move the goalpost.

whirlaway

2 years ago

Mish, the EU has set the price cap on Russian oil at $60. I expected to see a post from you on that.

Webej

2 years ago

Reply to whirlaway

There’s been several. You want one on the number 60?

whirlaway

2 years ago

Reply to Webej

I have read at least some of those posts. The EU announced this $60 cap recently. I wanted to know if this one is different. My feeling is that it could be even worse than what Mish had thought!

MPO45

2 years ago

The G20 inflation rate is 14.02% but if you remove Argentina and Turkey because those numbers are crazy, the G20 inflation rate is 7.403% and in a few places the rate is still growing or flat and not declining. I do wonder what will happen when China fully re-opens and demand from that country sky rockets.

https://tradingeconomics.com/country-list/inflation-rate-?continent=g20

GruesomeHarvest

2 years ago

One must remember that the CPI is a heavily massaged metric which is always biased to the down side.

Also, inflation will be with us for a long time. The Federal debt must be reduced and inflation is the debtor’s friend. They want inflation in the 3% to 4% range to avoid political turmoil. But controlling it to such precision is difficult so expect a whipsaw from inflation to deflation as they play fast and loose with our life’s savings.

8dots

2 years ago

In Feb/Mar 2023 the European inflation might exceed 20% y/y. Madam ECB might raise the deposit rate to 2.5%-3%, slightly below the Fed.

But next year y/y EU CPI might be negative.

8dots

2 years ago

In Dec seaborne shipments from Russia to Europe will stop. By Feb NG reserves in Europe might sink to 20%.

Webej

2 years ago

Reply to 8dots

They’re not reserves, they’re volume buffers for peak demand.

vanderlyn

2 years ago

depends how you measure inflation, but i like the many centuries tried and true method. how many basics of life will your king’s coins buy you. a loaf of bread, a leather pair of sandals/shoes, a toga or brooks brothers suit. a shack over one’s head. food clothing and shelter(includes heat). by all these measures which can be guessed for future by following M1 and Treasury bill issuance and FED balance sheet, our inflation rates are raging. shadow stats covers it best. gold is money. the rest is just currency. which all go to zero eventually. paraphrasing the greatest financiers and swindlers of many many centuries. yawn.

Zardoz

2 years ago

Reply to vanderlyn

I don’t think the Brooks brothers suit should be included. The other stuff’s for survival…. the suit is to make you a purdyman so the other purdymen will admire you.

Six000mileyear

2 years ago

I’m reading conflicting reports. The charts presented here show inflation in Europe to be about the same as in the US; however, news reports the past nine months indicate huge energy price increases due to boycotting Russian energy products. What has lead to these discrepancies?

Webej

2 years ago

Reply to Six000mileyear

Wait till they factor in the weightings of various expenses.

Inflation is skewed by unrealistic weightings for things like medical care (way lower than people actually spend).

Obviously the weighting for energy has jumped, but unlikely to already be reflected in the methodology.

8dots

2 years ago

EU taxes are 50%-70% at the pump. UK oil resources are old and deep underwater, but the commodity portion is small. UK left the union, but 20% VAT and other taxes are high. Sunak give the rich a break. GBP/USD and EUR/USD plunged in Sept to nadir, but are sharply up since. The CPI charts are from Sept 1st, showing how the poor and the middle class are struggling. No wonder why they revolted and elected Sunak, a Stanford grad.

oee

2 years ago

What you did not mention is the US inflation is now 7.70% as of October so your data is out of date. Also, the UK has 11.1% inflation. You need to correct your data.

WarpartySerf

2 years ago

I have the same question as Texas Tim – Are all countries as dishonest as the USA in presenting what amounts to “Chinese” statistics to

their populace ?

vanderlyn

2 years ago

Reply to WarpartySerf

exactly. the numbers mish posts are basically hooey. there are much easier ways to gauge money printing and purchasing power. what is true inflation. it’s austrian econ sound money thesis which is ancient wisdom, retreaded for modernity.

Zardoz

2 years ago

Reply to WarpartySerf

Looking at the series on the graphs, they all track fairly closely, so if they’re all lying, they’re doing it consistently.

PapaDave

2 years ago

Reply to WarpartySerf

I expect the economic numbers from western nations to be their best guess from the limited data they collect. Unlike most skeptics here, I accept them as they are. I do not believe that they are purposely massaged or altered in any devious way. That would serve little purpose.

However, all the conspiracy kooks here would rather believe everything is manipulated. To what purpose, I do not know.

Because, either way, every day brings new numbers; which are best guesses just like the numbers the previous day. And yesterdays numbers are soon forgotten as everyone awaits tomorrow’s numbers. I see no point in attempting to manipulate numbers that will soon be forgotten.

So I take the numbers as they are, flawed and imperfect; but still a small part of the big picture.

And that picture continues to be:

Slow growth, moderate inflation, and not enough energy supply.

worleyeoe

2 years ago

Reply to PapaDave

I wouldn’t call the revised Q3 2.9% GDP slow growth. Inflation should be categorized as still high, and totally agree about energy supply.

Without being too conspiracy theorist, I don’t think all aspects of US economic reporting are immune from political scope creep, but I would agree that the BLS most likely doesn’t (in general) fudge the numbers. I think this happens further down the chain, for example, these supposed 11M available jobs. I think that’s an example of how corporations are overreporting the real jobs they have open.

For all the supposed brain trust, I would say the Fed is the worst abusers of getting tunnel vision for any number of reasons, including political ones.

PapaDave

2 years ago

Reply to worleyeoe

Third quarter GDP is “one number” subject to revision, over and over. What were Q1 and Q2 numbers? Anyone remember? And what were the revisions? Anyone still care? And if you average all 3 of them, what do we get? Slow growth. Moderate inflation still above 2% targets. A lot of ho hum. Yet so many here get all worked up. And for what? Beats the heck out of me. But then, I’m not one to care about scoring useless political points.

8dots

2 years ago

China and Japan, number #2 and #3 economies, are excluded. Modi of India became the G20 president. Number #1 priority on his agenda is taming China. China closure boomeranged on them. Within days, the dictator faced protests. Import from China is shifting elsewhere. To stop the bleeding China might offer us steep discounts and political gains, The pacified China will reduce global tension and high inflation.

Biden will be pleased with China’s openness. Modi will celebrate with a victory lap. Meanwhile China will launch it’s #7 aircraft carrier and build 1,500 nuke heads to threaten us.

TexasTim65

2 years ago

What I want to know is do those other countries count inflation using the same methods as the Fed? If not, how can their inflation rate be reasonably compared to ours?

StukiMoi

2 years ago

Reply to TexasTim65

It makes no difference.

Arbitrary gibberish can’t even meaningfully be compared to itself.

Economically meaningful inflation, is inflation of demand driving money supply. Which, in the age of bailouts, is pretty close to the broadest measure of outstanding credit, since The Fed won’t allow any meaningful amount of it to be liquidated, since it is owned by members of the connected leeching classes.

Pretending there exists some way of measuring “inflation” by way of five year planners fiddling around with arbitrary “goods baskets”, makes even less sense than attempting to measure it by studying the equally arbitrary acts of alchemy which were popular back before central banks became the designated alchemists of last resort.

MPO45

2 years ago

It’s a shame you didn’t include the current central bank rates for each of the countries listed.

US – 3.75% to 4.0 %

Canada – 3.75%

UK – 3.00%

EU – 2.00%

What is Canada doing that is better at controlling inflation with a lower central bank rate? The UK central bank rate isn’t that much different than the US or Canada yet has growing inflation. Perhaps central bank rates don’t control inflation at all but country specific supply/demand challenges do.

oee

2 years ago

Reply to MPO45

The problem with the UK is that it left the EU. It can not longer count on cheap labour from the EU and frictionless access to the EU Services and goods. That means lower supply (higher prices) and lower demand -which translates to lower living standards.

vanderlyn

2 years ago

Reply to oee

brexit. very dumb move. but i do agree with sentiment for autonomy.

Zardoz

2 years ago

Reply to vanderlyn

We haven’t seen what will become of the EU yet. I’ll reserve judgment on the correctness of the move for a decade or 2.

PapaDave

2 years ago

Inflation trending down for now. Expecting higher energy prices in 2023, which will prevent inflation from dropping much below 4 or 5%.

MPO45

2 years ago

Reply to PapaDave

labor shortages will be constrain the oil supply moving forward as it’s happening now although I still think it’s possible oil prices drop significantly if Russia-Ukraine situation ends. One thing guaranteed is oil volatility.

https://www.houstonchronicle.com/business/energy/article/Rig-count-flat-17627420.php

Zardoz

2 years ago

Reply to MPO45

I don’t understand how we have 8 billion people and a labor shortage.

PapaDave

2 years ago

Reply to Zardoz

Its more a skills shortage AND location mismatch. Every decade, jobs require more and more skills.

Perhaps a fair number of Russian oil workers have left the country in search of greener pastures. We could use some of them over here.

Lisa_Hooker

2 years ago

Reply to PapaDave

To do what? Stock Amazon warehouse shelves?

As you have pointed out many times – no oil company is currently investing in labor or capital.

PapaDave

2 years ago

Reply to MPO45

Anything is possible. Oil prices are very volatile. They ran from $80 to $120 and back to $80. OPEC seems willing to cut production if they drop below $80 or $90. And at $70 the US will start refilling the SPR (if prices can get that low). So lots of pricing supports There to prevent any big drop in prices.

Supply, on the other hand is constrained. Labor shortages are indeed one factor. As is a decade of reduced capex by oil producers which leave us woefully short of any additional supply, should demand increase, say from China, or increased global growth.

Lots of room for prices to go up a lot, but little room for prices to drop much.

Fortunately, oil companies are perfectly happy with $80 oil and can generate 20% free cash flow at $80. Add 5% for each $10 price increase.

Jojo

2 years ago

Reply to PapaDave

Inflation RATE trending down. Inflated prices still staying elevated.

Portlander2

2 years ago

I find it fascinating there was so much synchrony in the fairly abrupt change in the inflation trend, from slumbering to sharply rising, starting around mid-late February 2021. This is Biden’s first month in office. It’s 2-4 weeks before the $1.9T Covid-19 Relief bill was passed, which is widely blamed for triggering the inflation. Was this driven by inflationary expectations or perceived political risk after Jan. 6 (Dems capture 2 Georgia Senate seats and control of Congress Jan. 5, or “Insurrection” Jan. 6)? I thought inflationary expectations, if they are a factor in affecting the actual inflation rate, does so only after a considerable lag, and why would these events in the U.S. affect inflation in Europe at the same time?

The timing of this abrupt change of inflation trend throughout Europe and the U.S. at this precise time is pretty weird (at least to me), and seems to cry out for explanation. I thought inflation was mostly driven by country-specific and idiosyncratic factors…..

amigator

2 years ago

Reply to Portlander2

It’s pretty easy to explain. All the central banks are coordinating their money creation efforts. I am sure they meet regularly and I aim sure the US fed is running these meetings… hence all money supplies up leads to all inflation. I would bet France has some how rigged numbers.

PreCambrian

2 years ago

Data makes sense. I think that the US gave out more individual stimulus which would cause inflation to peak first. Then Ukraine situation hit energy in the EU which is causing their inflation to go up. France I guess is lucky because of the nuclear electric power that it generates.

vanderlyn

2 years ago

Reply to PreCambrian

luck has nothing to do with that. french smart. germans dumb. been that way for centuries.

Captain Ahab

2 years ago

Reply to vanderlyn

FYI, your conclusion is NOT reflected in national IQ scores.

Zardoz

2 years ago

Reply to Captain Ahab

You assume IQ correlates directly with smart.

MarkraD

2 years ago

Reply to Zardoz

Angry & opinionated always = smart.

https://youtu.be/-JshZh1z4dc

vanderlyn

2 years ago

Reply to Captain Ahab

iq tests. ha ha ha. french have nukes. germans have solar. in germany. dumb shyts for centuries. good little workers and order takers though. mein leibling

Inflation Around the World: How Does the US Compare to Canada and the EU?

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