Ukraine crisis pushes US inflation to new four-decade high

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WASHINGTON DC  — Americans paid more for gasoline, food, and other essentials last month amid an ongoing wave of record inflation that Russia’s invasion of Ukraine made worse, according to government data released Tuesday.اضافة اعلان

The Labor Department’s consumer price index (CPI) climbed 8.5 percent over the 12 months to March, a rate — not seen since December 1981 — that added pressure to President Joe Biden’s administration even as it looks for ways to punish Moscow for the attack on its neighbor.

Prices have surged across the world’s largest economy as it tries to recover from the COVID-19 pandemic, dragging Biden’s approval ratings lower, though the March data contained signs that the spike was rounding off.

“The Russia-Ukraine war has added further fuel to the blazing rate of inflation via higher energy, food, and commodity prices that are turbocharged by a worsening in supply chain problems,” Kathy Bostjancic of Oxford Economics said.

Compared to February, prices rose 1.2 percent, within analysts’ forecasts, but if there was good news to be found in the data, it was in “core” prices, which exclude the volatile food and energy sectors. These increased 0.3 percent last month, less than economists anticipated.

The data nonetheless underscored the potency of the price jumps and bolstered the case that the Federal Reserve will take aggressive action at its policy meeting next month, likely raising rates by half a percentage point as opposed to the quarter-point increase agreed to last month.

“With labor shortages pressuring firms to raise wages, we are in the midst of a wage-price inflation cycle that will require extreme action on the part of the Fed to rid the economy of the spreading inflation threat,” economist Joel Naroff said.

While the US economy has bounced back strongly from the mass layoffs that marked the pandemic’s start, inflation began bedeviling the recovery last year, as businesses struggled to find enough workers and supplies, the Fed kept interest rates low, and Congress approved stimulus measures that drove up demand among American consumers.

Biden’s public support has dropped as prices have increased, leaving the White House scrambling to offer relief, including by releasing strategic oil supplies to lower prices at the pump and, before the data’s release on Tuesday, waiving a prohibition on selling a lower-price gasoline blend during the summer months.

But the most potent actor in Washington against inflation is the Fed, and their rate increases are indeed expected to lower prices in the months to come, though economists warn the tightening could also cause a recession.

Until then, the Labor Department data showed Americans are facing real financial pain when they go to purchase things they cannot avoid.

Gasoline prices rose 18.3 percent last month, accounting for half the overall increase in CPI. Prices for shelter, the category including rents, rose 0.5 percent.

Food prices rose one percent overall, while prices for groceries were up 1.5 percent in the month, and 10 percent over the past year -- the largest such increase since March 1981, according to the data.

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