France, U.S.: Similar Financial Woes, Different Result
STEVE INSKEEP, host:
Europeans are feeling the American economic slowdown. But while the biggest worry here is home prices, for Europeans the biggest problem is inflation. From Paris, Eleanor Beardsley reports.
ELEANOR BEARDSLEY: Last month, French inflation hit an 18-year high, taking the price of basic foods and commodities with it. Now, even buying fruits and vegetables at a street market has become a tricky business, says Parisian Brigitte Roaz(ph).
Ms. BRIGITTE ROAZ (Paris Resident): (Speaking French)
BEARDSLEY: This year is the worst I've seen, says Roaz. To afford things you have to look for deals in several markets and play the competition off against each other.
Two weeks ago, the European Central Bank raised interest rates for the first time in more than a year to keep inflation at bay. French economist Elie Cohen(ph) says that's Europe's main problem, not an economic downturn like in the U.S.
Mr. ELIE COHEN (Economist, France): The situation is quite different in Europe. You know, we don't have the subprime crisis. Of course we bought some financial products from the U.S., but we don't have a massive effect on all the building sectors as you can see it in the U.S.
BEARDSLEY: Cohen admits that food prices are going up, but he says that's directly linked to the price of crude oil. Core inflation - that is, inflation not related to external factors and thus a better economic measure - is still at a low 2 percent.
Mr. COHEN: We don't see this cumulative process where prices are driving wages, wages are driving prices, etcetera, etcetera. We are not in this kind of mood.
BEARDSLEY: Cohen believes inflation will come down if and when oil prices drop. Things may be difficult here, he says, but Europe is far from a recession.
For NPR News, I'm Eleanor Beardsley in Paris.
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