After fuel costs skyrocketed during the first full month of the Ukraine war, the US inflation rate hit a new 40-year high in the year to March.
Following a double-digit jump in energy prices, consumer prices increased by 8.5 per cent, the highest yearly increase since December 1981.
Following Russia’s invasion of Ukraine, President Joe Biden imposed a restriction on all oil and gas imports from Russia last month.
At the same time, US gasoline prices hit fresh highs.
The invasion on Ukraine began on February 24th, prompting a flurry of international sanctions against Russia, the world’s second-largest oil exporter.
According to the US Labor Department, energy prices increased by 32% in the year to March.
Food prices had also risen by 8.8 per cent over the same time period, according to the report. Food price inflation has been worsened by Russia’s invasion of Ukraine, just as it has been for energy prices. Both countries are major exporters of commodities like wheat and sunflower oil.
North Carolina resident Kristen Havlik described price rises in her area as “crazy.”
“During the first year of the pandemic, my rent went up by $400 a month which was extremely hard to afford as I had lost majority of my income from one of my jobs,” she told the BBC.
“My husband and I were privileged to both secure well paying jobs last year but if we had not, we would have had to move outside of our area to afford to keep living in NC.”
“We are both still very much working class and now can’t save up enough money fast enough to keep up with the insane home-buying market where sellers are making record profits,” she added.
“The Russia-Ukraine war has added further fuel to the blazing rate of inflation via higher energy, food, and commodity prices that are turbo charged by a worsening in supply chain problems,” said Kathy Bostjancic, chief US economist at Oxford Economics.
The Federal Reserve raised its benchmark interest rate for the first time in three years last month, owing to rising US inflation. The Federal Reserve of the United States has also indicated that interest rates will be raised several times this year.
Inflation and rising food and gasoline prices in Western countries, according to Russian President Vladimir Putin, will begin to exert pressure on governments there.
Prior to Russia’s invasion of Ukraine, inflation rates were already growing as many global economies reopened following the relaxation of Covid restrictions. Prices, on the other hand, appear to be rising at a faster rate than wage increases.
According to recent data, average hourly wages in the United States increased by 5.6 per cent in the year to March, far less than the most recent rise in the cost of living.
However, other experts believe that inflation is nearing or has already reached its peak in March.
Inflation increased by 1.2 per cent month over month in March, compared to 0.8 percent in February. When volatile fuel and food costs are removed, core inflation rises by 0.3 per cent, which is less than projected.
“The main line is inflation is going to stick around for a while,” said Peter Cardillo, chief market economist at Spartan Capital Securities, “but we could see it starting to reverse in the summer months, providing we see some cooling off in agricultural and energy costs.”
(Adapted from BBC.com)