War in Ukraine, last impulse to an inflation that does not yield in the US.

Inflation continued its ascent in February in the United States and reached a maximum in 40 years for the measurement to 12 months, driven now by the price of fuels, which rise due to the war in Ukraine and add to persistent supply problems.

In the last twelve months to February, inflation was 7.9%, the highest since January 1982.

Compared to the previous month, the increase in February was 0.8%, according to the consumer price index (CPI) published by the Department of Labor.

Gasoline prices explain almost a third of this increase, with an increase of 6.6% compared to January.

Last month, food items also suffered increases (1%), especially in stores (1.4%), while the increase in restaurants was much more moderate (0.4%).

“The Russo-Ukrainian war further fuels the skyrocketing rate of inflation through rising prices for energy, food and basic raw materials, which are inflated by worsening supply chain problems”, said Kathy Bostjancic, chief economist at Oxford Economics.

“This will lead to a higher peak of inflation in the short term and a slower than expected slowdown in 2022,” he added, while forecasting inflation “of almost 6.5% on average in 2022 after an increase of 4.7% in 2021″.

In the short term, gasoline should continue to rise in March as the price of a barrel approaches its all-time high since 2008.

“Russia is the third largest oil producer in the world (behind) Saudi Arabia and the United States,” explained Diane Swonk, chief economist at Grant Thornton. “Even though we don’t buy much from them, oil prices are set based on global supply and demand,” she remarked.

Embargo

Food products had their biggest increase in 12 months since 1981 (7.9%).

Only in February, the jump is 1%, also due to the conflict in Europe. “Oil increases the cost of energy, animal feed and fertilizers, while Ukraine is one of the world’s largest grain producers”, highlights Swonk.

The rise is just beginning, he warns, and “many of these crops will not be planted this year”.

President Joe Biden announced an embargo on US imports of Russian oil and gas on Tuesday, and Energy Secretary Jennifer Granholm on Wednesday called on the country’s oil companies to produce more oil to ease the market and prices.

Used vehicles

Excluding volatile food and energy prices, core inflation moderated in February over January (0.5% vs. 0.6%).

The price of homes is “by far the most important factor in the increase,” said the Department of Labor.

In the 12 months to February, this measurement indicates a price increase of 6.4%, a maximum since August 1982.

In contrast, second-hand car prices, which have increased 41.2% since February 2021, had a small month-on-month decrease in February (-0.2%), the first since September.

For the Republican opposition, however, the economic policy of the Democratic president is responsible for this price spike.

The White House made the fight against inflation one of its priorities.

All eyes are focused on the Federal Reserve, which will hold its monetary policy meeting on Tuesday and Wednesday, in which it should decide on a first interest rate hike in two years. This would have the effect of making credit more expensive and curbing demand and investment, and therefore the pressure on prices.