The U.S. has the steepest inflation in the G7

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**Kai Ryssdal** (1:01)
Disinflation is the macroeconomic word of the day. Farming is another word. Artificial intelligence are two more. From American Public Media, this is Marketplace.
In Los Angeles, I'm Kai Ryssdal. It is Wednesday today. This one is the 15th of July. Good as it always is to have you along, everybody.
It's helpful, I think, every now and then, to step back and take stock, see where things stand. And where things stand in this economy, right now, I should be clear, is that inflation has cooled just a bit. We saw the CPI yesterday, and it was a similar story today for wholesalers. Headline producer prices fell 3.10% in June, and it's month to month, which is, you know, good for anybody who buys stuff. But step back a little bit more, and you'll notice that compared to other developed economies, US inflation beats them all. Highest in the G7, that's Japan and France, the UK, Canada, Italy, and Germany. Now, why? Here's Marketplace's Sabri Benishawar.

**Sabri Benishawar** (2:15)
Over in Germany, inflation is about 2.5%. In Japan, it's just 1.5%. And here in the good old US of A, we are stuck with 3.5%.
Why are we like this? One reason is that we did it to ourselves.

**Stephen Stanley** (2:30)
One force that is pushing inflation up here, of course, is the tariff situation or has been.

**Sabri Benishawar** (2:39)
Stephen Stanley is chief US economist for Santander, but tariffs are kind of done, you know? Like they happen, they're here, they're probably not going up much more, although who knows? So there's more going on that's making American inflation worse.

**Stephen Stanley** (2:52)
What it comes down to, I think, is that the US economy is just much stronger. We're running hotter than many other countries.

**Sabri Benishawar** (2:59)
Inflation usually is what you get when an economy is overheating in some way. And for the US., one fuel feeding the fire is AI. Stephen Juno is a senior US economist at B of A.

**Stephen Juno** (3:10)
AI has driven a lot of capex.

**Sabri Benishawar** (3:12)
CapEx, as in capital expenditure, as in tech companies have been spending a lot, an estimated $800 billion this year in the US.

**Stephen Juno** (3:19)
That capex has also led to upward pressure on prices for certain consumer products. Think about your computers, right? You're paying more for ramp. Think about anything that has a GPU in it. There's upward pressure.

**Sabri Benishawar** (3:31)
Also, AI has driven up the stock market, so people with stocks feel better about spending and you just get more pressure on prices. Bottom line, we have got more inflation for the same reason we have got strong economic growth. So, thanks, AI., but also inflation sucks and there's a big old catch here.

**Christopher Hodge** (3:47)
The growth is fairly concentrated.

**Sabri Benishawar** (3:50)
Christopher Hodge is head economist at Natixis CIB.

**Christopher Hodge** (3:53)
Consumer durable goods purchases, residential construction, commercial construction, that's all lagging.

**Sabri Benishawar** (4:00)
That could help control prices over the rest of the summer.

**Christopher Hodge** (4:04)
So, if I look further at the horizon, it's hard for me to see what's going to accelerate inflation.

**Sabri Benishawar** (4:10)
That is, of course, the hope. In New York, I'm Sabri Benishur for Marketplace.

**Kai Ryssdal** (4:15)
All that AI spending, more on that in a second. Wall Street midweek traders are just keeping their heads down and buying, we will have the details when we do the numbers.
We got the latest Beige Book today, the Fed's anecdotal account of this economy, always full of memorable tidbits, including this one today. Bars in Greater Boston also saw a market uptake in beer sales, which they attributed to the World Cup. That's a quote, and we are looking at you, Scotland. But why does something like that matter to the central bank?