Wednesday, May 29, 2024

Soaring gasoline and food costs send U.S. inflation to 40-year high

The U.S. inflation rate hit a fresh 40-year high in the year to March after fuel and food prices soared during the first full month of the Ukraine war.

Consumer prices surged by 8.5% – the largest annual gain since December 1981 – following a double-digit rise in energy prices, the BBC reports.

Last month, President Joe Biden banned all imports of oil and gas from Russia following the invasion of Ukraine. At the same time, U.S. fuel prices reached new records.

The attack on Ukraine, which began Feb. 24, triggered a wave of international sanctions against Russia, the world’s second largest oil exporter.

U.S. energy prices rose by 32% in the year to March, according to the country’s Labor Department. It also said that food prices had surged over the same period, up by 8.8%. Like energy, food price inflation has been exacerbated by Russia’s invasion of Ukraine. Both countries are big exporters of widely used goods such as wheat and sunflower oil.

“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 U.S. economist at Oxford Economics.

The soaring rate of US inflation prompted the Federal Reserve last month to lift its key interest rate for the first time in three years. The U.S. central bank signalled that the interest rate will rise a number of times this year.

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