Is Inflation in the U.S. Greater than Other Countries Around the World?
Some have suggested that the inflation we are experiencing is not just US centric inflation. We check the data.
Many sources have claimed that the US is not unique with recent inflation. Other sources have state the US inflation is unique. Is the United States unique in how it is experiencing the recent bout of inflation? Is what the U.S. experiencing due to the pandemic? We find out.
Data & Methodology
The OECD publishes Consumer Price Indices for all of the OECD countries around the world. We relied on this data in order to evaluate what inflation in the U.S. looks like relative to the it’s peer countries; Canada, The United Kingdom, Spain, Sweden, Poland, New Zealand and Germany.
We reviewed the entire CPI Basket, the CPI Basket components, CPI Goods, Energy, Services, Housing and CPI without food and energy. For each of these we compared the U.S. to its peers as well as Canada.
First, we reviewed the U.S. and all peer countries. We can visually see that the U.S., in recent history, exceeds every other country. However, even before the pandemic it still floated towards the top of it’s peers.
We also broke down each of the components and compared those for all of the countries.
After observing the U.S. in towards the top of the pack, both before and after the pandemic, we took the U.S. inflation rates and the average of all of the U.S. peer inflation rates and compared them. Here we found that the U.S. was slightly higher previous to the pandemic, but also more than slightly higher after the pandemic. Post pandemic, using a visual inspection, the U.S. does appear to be higher.
We also broke down each of the components and compared those for the average of all of the U.S. peer countries.
We also looked at the larger categories of Good, Energy and Services, both among all countries and against the average of all countries.
But, to really identify if there was a major shift post pandemic, we calculated the spread for each month. The spread being the difference between inflation in the U.S. and the average of all of the U.S. Peers, or other compared country.
Here we found that while the U.S. has had higher inflation from 2016 on, there was a distinct increase in the spread after the pandemic. This means that inflation in the U.S. increased more than it has in other countries from January 2020 until now. The U.S. has experienced nearly 1% greater inflation when compared to all of it’s peers.
We also looked at the composition of the spread. We found the largest amount of spread in transportation, food and clothing.
However, the U.S. is very unique and had issues with its ports over the past year. This could suggest that any country on the content may experience inflation due to the logistical issues created by shipping long distance in the ocean.
To help account for this we executed the same analysis with the U.S. against Canada. Here we found that the U.S. experienced 1% more inflation than Canada. We did find that transportation, communications and clothing accounted for a large amount of this.
We also reviewed inflation and did not include food or energy to find where difference was originating and found similar results. Food and energy did not account for the majority of this inflation. Food and energy are often volatile.
We found that the U.S. is experiencing more inflation than its peer countries. While the pandemic certainly could account for an increase in inflation, all countries experienced the pandemic. Even after accounting for this we did see that the U.S. still experienced about 1% more inflation. This would imply that there is some U.S. specific issue. We were able to compare the U.S. to Canada and see that it also is not due to the large travel distance required to arrive in Northern American ports. This suggests that there is some U.S. specific policy that is responsible for this difference.