France, U.S.: Similar Financial Woes, Different Result

In France, inflation hit an 18-year high last month. But the country isn't facing an economic slowdown similar to the United States.

Copyright © 2008 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.


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.

Copyright © 2008 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.



Please keep your community civil. All comments must follow the Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.