US inflation will accelerate as Ukraine intensifies war impact – 07/03/2022

By Lindsay Dunsmuir

(Reuters) – Russia’s invasion of Ukraine has shattered U.S. consumer confidence in rising costs, with prices at gas stations rising sharply over the past 17 years, as have prices on other commodities, such as food. .

In the run-up to the invasion, the next monthly US inflation report, released on Thursday, was expected to pick up prices at a pace not seen in 40 years.

Data for February will show only an initial impact from rising oil prices, which were above $ 130 a barrel on Monday, but this jump should trigger general inflation in the coming months.

“February was expected to be the peak of inflation, but the shock in Ukraine is already pushing up petrol prices for March,” said Tim Dui, an economist at SGH Macro Advisors.

These improvements come at a difficult time for the Biden administration, which has already been criticized for rising rents, electricity and food costs as the economy is plagued by the impact of the Govt-19 epidemic.

US Federal Reserve officials will also closely monitor inflation, which will be released within a week of the meeting, in which the Fed is expected to raise interest rates by 0.25 percentage points, starting a tight cycle. Monetary policy aims to reduce. Inflation, but without hindering economic expansion.

According to economists conducted by Reuters, the US consumer price index rose 7.9% in February from 7.5% in January. The monthly rate should have increased to 0.8% after rising 0.6% in the previous month.

According to the American Automobile Association (AAA), the average price of conventional unleaded petrol in the United States on Monday was $ 4,065 a gallon (3.8 liters), about 5 cents lower than its record high. The AAA says last week’s increase of 45 cents per gallon was the largest since 2005.