Inflation in the US: Seven dollars for a scoop of ice cream

The US Federal Reserve has already raised the key interest rate twice – but the inflation rate is still higher than in the euro area. Above all, food prices are rising. The government has not yet found a solution.

An ice cream truck is parked near the Lincoln Memorial in Washington, with music blaring from speakers. Despite high summer temperatures, most tourists don’t want an ice cream within manageable limits: a scoop of ice cream costs seven US dollars.

The equivalent of seven euros for a small ice cream on the hand, a tourist from New York and his girlfriend can hardly believe that. “Inflation makes for completely crazy prices,” says the man.

US prices rose 9.1 percent year-on-year in June. Food and energy in particular have become more expensive. “We’ve had very low inflation rates in the US since the mid to late 1980s,” says Neil Saunders of economic analysis firm Global Data. “In some cases there was even deflation – i.e. falling prices – as a result of globalization, because of optimized supply chains and advances in fertilizer and food production.”

The price increases in the USA are now all the more a shock for many consumers, says Saunders. “Because they’re not used to it.”

Highest inflation rate in 40 years

Inflation in the United States is now at its highest since the early 1980s. And this despite the fact that the US Federal Reserve has raised interest rates twice this year and announced further interest rate increases.

US President Joe Biden has been relentlessly emphasizing for weeks: The fight against inflation is his most important economic policy project. He understands that people in the US are worried about the high prices.

Biden speaks of “Putin tax”

Biden spoke of a “Putin tax” on food and gas prices in a keynote address on inflation in Los Angeles in June. He wanted to make it clear that, in his view, the causes of inflation lie outside the United States.

Most economic experts agree with Biden: In addition to the consequences of the corona pandemic and the disrupted supply chains worldwide, they point above all to the Russian war of aggression in Ukraine. “It’s not really fair to blame the Biden administration for the high prices,” says analyst Saunders. No matter where you look, there are high inflation rates all over the world. “The US President is a powerful position, but not so powerful that he could influence inflation rates worldwide.”

Price increase becomes a campaign issue

For Republicans and the right-wing conservative media, the ever-rising prices are perfect campaign ammunition. Less than four months before the parliamentary midterm elections, they cannibalize the issue almost with relish. The two main accusations: First, Biden and his Democrats have denied that inflation is a problem at all, and now – the second accusation – they are doing nothing.

“People don’t care how and why prices are going up,” says Fox News anchor Jesse Watters. “People want to know when prices will go down again! The president just says: It’s not my fault, we’re on the subject. But that’s not true!”

State oil reserves released

The US government disagrees. For example, she points to Biden’s talks with port operators and logistics companies to resolve supply chain issues. And that Biden released parts of the state’s oil reserves in order to depress prices. In fact, fuel prices in the USA at least have recently fallen noticeably.

However, this does not change the high prices on the ice cream truck next to the Lincoln Memorial in Washington. The couple from New York have to share a scoop of ice cream. “Seven bucks for two, 3.50 each. I reckon it’s at least the best ice cream ever.”