– How can inflation be hitting this hard in the US, when the dollar is getting stronger around the world when compared to other currencies like the Euro?

Question

– How can inflation be hitting this hard in the US, when the dollar is getting stronger around the world when compared to other currencies like the Euro?

In: 16

Answer 1

Firstly, Inflation is high everywhere
Secondly, a strengthening currency does tend to reduce imported inflation. A weakening currency does the opposite.
So based on this you’d expect inflation to be high, but a tad lower than elsewhere.

However the bigger factor is the US government stimulus and the Fed QE has been bigger than anywhere else. Now lots of this leaks and has a global effect, but the biggest effect is in the US overall. This has bumped up demand more than elsewhere and raises Inflation