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France, U.S.: Similar Financial Woes, Different Result

STEVE INSKEEP, Host:

Europeans are feeling the American economic slowdown. But while the biggest worry here is home prices, for Europeans the biggest problem is inflation. From Paris, Eleanor Beardsley reports.

ELEANOR BEARDSLEY: Last month, French inflation hit an 18-year high, taking the price of basic foods and commodities with it. Now, even buying fruits and vegetables at a street market has become a tricky business, says Parisian Brigitte Roaz(ph).

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M: (Speaking French)

BEARDSLEY: Two weeks ago, the European Central Bank raised interest rates for the first time in more than a year to keep inflation at bay. French economist Elie Cohen(ph) says that's Europe's main problem, not an economic downturn like in the U.S.

M: The situation is quite different in Europe. You know, we don't have the subprime crisis. Of course we bought some financial products from the U.S., but we don't have a massive effect on all the building sectors as you can see it in the U.S.

BEARDSLEY: Cohen admits that food prices are going up, but he says that's directly linked to the price of crude oil. Core inflation - that is, inflation not related to external factors and thus a better economic measure - is still at a low 2 percent.

M: We don't see this cumulative process where prices are driving wages, wages are driving prices, etcetera, etcetera. We are not in this kind of mood.

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BEARDSLEY: For NPR News, I'm Eleanor Beardsley in Paris. Transcript provided by NPR, Copyright NPR.