Bloomberg Surveillance · Monday, July 27, 2026
Inflationary pressures in the US are primarily driven by demand, distinct from Europe where supply shocks, particularly from energy prices, are the main concern. While Europe's consumer purchasing power has been impacted, consumption growth is at half its normal pace, sustained by the corporate and manufacturing sectors. The US, being a net energy producer, faces different demand-side dynamics impacting its inflation.
“And so that means all the central banks have to look at what are the other drivers of inflation. And that's where we were a bit more concerned about the situation in the US than say in the Eurozone or in the UK, where there are no other meaningful drivers of inflation, whereas in the US you see much more broad based inflation drivers.”
“Well, in the US you see much more well, you see both. You see demand and supply, but principally demand. And remember that energy, US being a net energy producer, doesn't face the supply angle to the same degree, whereas in Europe it is principally a supply a supply shock. Demand has been resilient, but it's not per se a driver of inflation in the way that we're seeing it in the US.”
“Not great? The consumer is facing, at least as far as the second quarter is concerned, purchasing power has been knocked backwards. If you believe the ECB projections for the year as a whole, the consumer will still be a little bit ahead in terms of purchasing power. However, consumption is growing at about half the pace it normally does. And what's been sustaining the resilience of growth that we've seen is really the corporate sector, and in particular the manufacturing sector, which has been supported by the defense industry and by a resumption of construction activity infrastructure in a number of economies, especially Germany.”