The latest data have revealed a marked divergence in inflation among advanced economies, with the core rate rising in the US but falling in the euro-zone and the UK. This largely relates to temporary factors, particularly the impact of government policies including VAT cuts in Germany and the UK. But there is some evidence that the relative resilience of incomes and confidence in the US has also played a role.

Read the publication Gap in US/Europe core inflation is not all it seems on the Capital Economics Website.

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