Last month, US consumer prices reached a record 40-year high, as the world’s greatest economy was pummeled by a jump in inflation which is projected to intensify as a result of Russia’s invasion of Ukraine. The consumer price index (CPI) jumped 8 percent in February compared to the same month last year, on Thursday the Bureau reported the largest increase since January 1982, as prices for fuel, food, and housing increased.
The Federal Reserve is set to raise interest rates for the first time since the pandemic began next week in order to tackle the price rises that have hampered the recovery from Covid-19. Analysts worry that the sanctions put on Russia, a significant producer of oil and gas, will cause severe shock. The Russia-Ukraine war adds gasoline to the flaming rate of inflation through increased oil, food, and core crude prices, which are turbo propelled by deteriorating supply chain concerns, British economists stated.
The jump in inflation has proven to be a headache for President Joe Biden, who has already seen his approval ratings fall as prices rise throughout 2021. Following the release of Thursday’s inflation data Americans should be aware that the costs we are enforcing on Putin and his chums are far greater than the costs we are facing, Biden said.
Consumption could suffer, according to Rubella Farooqi of High-Frequency Economics, as the US economy faces both higher interest and rising gasoline costs as a result of the Ukraine conflict. If the situation in Ukraine continues, the crude prices surprise will likely push price metrics substantially higher, she wrote in an analysis. Further gains pose a risk to consumer spending at a time when the Federal Reserve is preparing to act to cool demands.
Pricing has escalated as the US economy has recovered from the Covid-19 crisis, owing to a combination of clogged supply chains, component and labor shortfalls, and high demand from American consumers who have seen their wallets fattened by federal spending.
According to the report, the CPI increased 0.9 percent in February compared to January, which was within estimates but higher than the 0.7 percent increase the month before. A third of the monthly CPI increase was accounted for by a 6.6 percent increase in gasoline prices, while overall food expenditures jumped 1 percent and grocery rose 1.5 percent, the highest increases in both sectors since April 2020. According to the survey, housing costs such as rent increased by 0.6 percent in January and by 4.7 percent in the previous 12 months.