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Inflation in the United States: seven dollars for a scoop of ice cream

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Status: 07/21/2022 08:08

The US Federal Reserve has already raised its key rate twice, but the inflation rate remains higher than that of the euro zone. Above all, food prices are rising. The government has not yet found a solution.

By Steffen Root, ARD Studio Washington

An ice cream truck is parked near the Lincoln Memorial in Washington, with music blaring from the speakers. Despite the high summer temperatures, most tourists don’t want ice cream within manageable limits: a scoop of ice cream costs seven US dollars.

The equivalent of seven euros for a small ice cream on the hand, a tourist from New York and his girlfriend can hardly believe it. “Inflation makes prices completely crazy,” says the man.

US prices rose 9.1% year-on-year in June. Food and energy in particular have become more expensive. “We had very low inflation rates in the United States from the mid to late 1980s,” says Neil Saunders of economic analyst firm Global Data. “In some cases, there has even been deflation – that is, falling prices – due to globalization, due to the optimization of supply chains and advances in the production of fertilizers and foodstuffs.

Price hikes in the United States are now all the more of a shock to many consumers, says Saunders. “Because they are not used to it.”

Highest inflation rate in 40 years

Inflation in the US is now at its highest level since the early 1980s. And this despite the US Federal Reserve raising interest rates twice this year and announcing further rate hikes interest rate.

US President Joe Biden has been insisting relentlessly for weeks: Fighting inflation is his most important economic policy project. He understands that people in the United States are worried about high prices.

Biden talks about ‘Putin tax’

Biden referred to a “Putin tax” on food and gas prices in a keynote address on inflation in Los Angeles in June. He wanted to clarify that, in his view, the causes of inflation lie outside the United States.

Most economic experts agree with Biden: in addition to the consequences of the corona pandemic and the disrupted supply chains around the world, they point above all to the war of Russian aggression in Ukraine. “It’s not really fair to blame the Biden administration for the high prices,” says analyst Saunders. No matter where you look, there are high inflation rates all over the world. “The US president is in a powerful position, but not so powerful that he could influence inflation rates around the world.”

Rising prices become a campaign issue

For Republicans and right-wing conservative media outlets, ever-rising prices are perfect campaign ammunition. Less than four months before the mid-term legislative elections, they cannibalize the question almost with relish. The two main charges: first, Biden and his Democrats have denied that inflation is a problem, and now – the second charge – they are doing nothing.

“People don’t care how and why prices are going up,” says Fox News anchor Jesse Watters. “People want to know when prices are going to come down! The president just says: it’s not my fault, we’re on the subject. But it’s not true!”

State oil reserves released

The US government disagrees. For example, she points to Biden’s discussions with port operators and logistics companies to address supply chain issues. And that Biden released some of the state’s oil reserves in order to drive down prices. In fact, fuel prices in the United States at least have recently come down significantly.

However, this does not change the high prices of the ice cream truck next to the Lincoln Memorial in Washington. The New York couple have to share a scoop of ice cream. “Seven bucks for two, 3.50 each. I think that’s at least the best ice cream ever.”

Despite Higher Interest Rates: Unchecked Inflation in the United States

Steffen Root, ARD Washington, July 21, 2022 at 12:43 a.m.

Source www.tagesschau.de

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