Fuel (Gas price ) prices spiking during Ukraine WThe inflation rate in the United States reached a new 40-year high during the year to March after a sharp rise in fuel prices during the first whole month of the war in Ukraine. Consumer prices rose 8.5% – the most significant annual increase since December 1981 – following double-digit increases in energy prices.
Last month, President Joe Biden banned all oil and gas imports from Russia after invading Ukraine.
Meanwhile, U.S. fuel prices are hitting new records. The attack on Ukraine, which began on February 24, sparked a wave of international sanctions on Russia, the world’s second-largest oil exporter. According to the U.S. Department of Labour, U.S. energy prices have risen 32% so far this year through March. He also reported that food prices rose 8.8% over the same period. As with energy, the Russian invasion of Ukraine has contributed to rising food prices.
Both countries are significant exporters of widely used commodities such as wheat and sunflower oil.
Kristen Havlik of North Carolina called the price increase in her area “insane”. “During the first year of the pandemic, my rent increased by $400 a month, which was extremely difficult to afford as I lost most of my income at one of my jobs,” he told the BBC. “My husband and I were honoured to get a well-paying job last year, but if we didn’t, we would have had to move out of our area to afford to continue living in North Carolina.” “We are both still working-class, and now we can’t save up enough money fast enough to keep up with the crazy home buying market where sellers are making record profits,” he added. “The Russo-Ukrainian war has added fuel to the fire of soaring inflation due to rising energy, food and commodity prices, which are overwhelmed by worsening supply chain problems,” said Cathy Bostianchich, chief US economist at Oxford Economics.
A surge in U.S. inflation prompted the Federal Reserve last month to raise its benchmark interest rate for the first time in three years. The U.S. Central Bank also said that interest rates will rise several times this year. On Tuesday, Russian President Vladimir Putin said that inflation and rising prices for food and gasoline in Western countries will put pressure on local politicians. Inflation was on the rise even before the Russian invasion of Ukraine, as many of the world’s economies reopened after Covid restrictions were lifted.
However, prices seem to be rising when wage growth is hard to sustain. The latest data shows that the average hourly wage in the United States increased by 5.6% in March, well below the latest increase in the cost of living.
But some economists believe that inflation may have been close to or peaked in March. Every month, inflation rose 1.2% in March after increasing 0.8% in February. However, excluding fuel and food prices volatility, core inflation rose 0.3%, missing expectations. Peter Cardillo, the chief market economist at Spartan Capital Securities, said: “The end result is that inflation will persist for a while, but we may see it reverse in the summer months, with the agriculture and energy sectors. Some cooling. Prices”.