Production: By Europod, in collaboration with Sphera Network.

EUobserver maintains an editorial partnership with Europod for the joint release of the podcast series Briefed, presented by Lea Marchal. The series can be accessed on leading platforms.

Here is the complete transcript:

Inflation rates in the United States align closely with those in the European Union and may even exceed them. Nevertheless, the American economy demonstrates noticeably stronger resistance to these pressures.

Why then do people across Europe experience sharper effects, and what potential remains for further price increases?

The US economy ranks among those least disrupted by developments in the Middle East conflict, based on analysis released Monday from the Peterson Institute for International Economics.

Institute projections indicate US GDP will finish roughly 1.2 percentage points below earlier expectations.

The outlook appears more challenging for Europe. The same analysis points to a potential contraction near two percent for the EU.

Current inflation actually stands higher in the United States than in the eurozone, registering near four percent against approximately three percent in April.

What drives this divergence?

In brief, rising prices deliver greater advantages to Americans than to Europeans.

Here is the explanation.

Oil and gas costs form the core of the matter.

Since energy trades globally, Americans also face elevated prices.

The key distinction lies in how much of that spending remains inside the domestic economy.

The United States generates about two-thirds of the oil it uses. Imports cover only a minor portion of natural gas needs.

Thus higher energy spending largely benefits American producers, bolstering the national economy while export revenues add further gains.

Europe pays substantially for reliance on foreign oil and gas supplies.

Energy is not the sole factor.

Fertilizers follow the same pattern, being vital to farming and mostly sourced from outside the EU.

The United States holds another edge here as the third-largest global producer of fertilizers.

For Europe's longer-term path forward, the direction is clear: scale up renewable sources aggressively.

Greater domestic clean power output reduces reliance on imported fossil fuels and supports lower energy expenses eventually.

In the near term, many consumers across Europe pose a straightforward query:

How far might prices still rise?

The outcome hinges primarily on the conflict's duration.

Naturally, that remains unknown.

While awaiting clarity, the European Central Bank has responded with interest rate increases.

Practically, loans grow costlier and saving more appealing.

This affects both households and companies.

The objective is direct: reduced spending lowers demand.

Weaker demand makes it harder for firms to increase prices.

Central banks use this approach to interrupt the inflation pattern.

One notable qualification applies.

Not every price adjusts downward readily.

Certain areas such as property or variable-cost commodities may ease.

Yet numerous service providers work with narrow margins already.

Consider a restaurant operator.

Energy expenses stay elevated, pay levels have risen with inflation, and running costs remain high.

Price reductions are simply not feasible under those conditions.

This explains why certain labor organizations have questioned the ECB move.

They contend that elevated rates may prove counterproductive by raising costs for clean energy investments.

Such an outcome could delay the renewable shift Europe requires.

Policymakers therefore navigate a careful trade-off between curbing inflation and sustaining expansion.

Ideally, inflation would settle near two percent.

Prices would advance steadily, wages would match, and firms would retain investment confidence.

That scenario does not describe current conditions.

Inflation has climbed past three percent within months, and ongoing uncertainty continues to pressure households and businesses alike.