KBRA releases research that examines the comparative retail sales performance across the U.S., euro area, and UK. As global central governments debate the appropriate level of monetary policy tightening in the current post-pandemic, energy shock inflationary environment, a closer look at contributors to core inflation provides a lens to the role of demand factors in spurring inflation. KBRA found that demand-side factors are contributing to the inflationary impulse in the U.S. compared to Europe, where it appears to be more contained, albeit with dispersion.

Key Takeaways

• U.S. retail sales remain elevated compared to the euro area and the UK.
• There is a range of resiliency across European retail sales, which partly reflects the varying levels of shocks in individual countries.
• Europe’s consumption basket is more skewed toward food than in the U.S., a feature that may contribute to significant erosion in purchasing power among European consumers.

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Related Publications

• June Retail Sales Show Continued Lost Ground to Inflation
• Divergent Labor Markets: U.S. vs. Euro Area
• Many Moving Pieces: COVID-19’s Impact on U.S. Jobs
• Europe’s Energy Crisis: Potential Impact of Russian Gas Supply Changes

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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