Adventures of a self-learning data scientist - Does gasoline explain the inflation difference between US and Euro?

Author

Mitsuo Shiota

Published

November 11, 2021

I read the tweet by Paul Krugman on the inflation difference between US and Euro. Why is the US inflation is now 2 percent higher than Euro? He thinks the difference can be explained by gasoline.

So I have done a rough calculation. To my surprise, my calculation does not support his claim. Excluding gasoline does not shrink the difference. My choice of “gasoline” might not be appropriate, or my use of the fixed component share might be a problem. I will wait for validation by someone.

P.S. Paul Krugman’s blog post on November 12, 2021 seems to have validated my calculation.

---
title: Does gasoline explain the inflation difference between US and Euro?
author: Mitsuo Shiota
date: '2021-11-11'
categories:
  - economics
  - R
---

I read [the tweet by Paul Krugman on the inflation difference between US and Euro](https://twitter.com/paulkrugman/status/1458575034969174019). Why is the US inflation is now 2 percent higher than Euro? He thinks the difference can be explained by gasoline.

So I have done [a rough calculation](https://github.com/mitsuoxv/cpi-inflation). To my surprise, my calculation does not support his claim. Excluding gasoline does not shrink the difference. My choice of "gasoline" might not be appropriate, or my use of the fixed component share might be a problem. I will wait for validation by someone.

P.S.
[Paul Krugman's blog post on November 12, 2021](https://www.nytimes.com/2021/11/12/opinion/inflation-us-europe-covid.html) seems to have validated my calculation.