Europe is facing a stickier inflation problem than the US, with investors and analysts increasingly warning of the risk of transatlantic divergence in both economic fortunes and the responses of policymakers.
After surging to multi-decade highs last year, consumer price inflation in the US has fallen faster and now stands at a much lower level. Annual growth in wages for workers in the UK and many eurozone countries has overtaken the pay rises of their American counterparts in recent months.
As growth in Europe substantially weakens, the US has recorded a 2.1 per cent annualised expansion. That figure for the second quarter, coupled with signs of labour market weakness, has raised hopes of a US “soft landing” — taming inflation without a recession.