US inflation hits 40-year high of 8.5% amid Russia’s war on Ukraine

High fuel prices are a combination of high inflation, lingering effects of the coronavirus pandemic, supply chain breakdowns and Russia’s ongoing war on Ukraine (Picture: Getty Images)

Inflation in the US over the past year grew 8.5%, a 40-year high, with surging gas and rent prices due to ’s war on .

The Labor Department on Tuesday released consumer price index data showing the biggest year-over-year jump since December 1981.

In addition, the report showed that inflation climbed 1.2% from February to March, after increasing 0.8% from January to February.

Gas prices hiked up 48% year-over-year in March, according to the department’s Bureau of Labor Statistics, and are up 18.3% since February. Prices at the pump have started trending downward, but that was not captured in last month’s report.

The March report is the first to reflect the complete surge in gas prices after Russia began its full-scale invasion of Ukraine on February 24. The US and its western allies have imposed sanctions on Russia that have disrupted energy markets worldwide.

Meanwhile, rent has increased for eight consecutive months, reaching levels higher than pre-coronavirus pandemic. The average rent rate for a two-bedroom home is $2,000, up 22% year-on-year, according to Rent.com.

‘Robust pay increases have been no match for the higher costs households are facing on rent, food, electricity, gasoline, and a pervasive list of both goods and services,’ Bankrate.com Chief Financial Analyst Greg McBride said on Friday, according to .

‘The buying power of Americans is being squeezed more and more each day, and you see this reality reflected in the dour consumer sentiment readings.’

A series of interest rate hikes appear to be on the way form the Federal Reserve, a measure meant to combat inflation. The reserve raised its federal funds rate from near zero to 0.25% to 0.5% last month.

The high inflation rate was prefaced by White House Press Secretary Jen Psaki on Monday. She blamed it on Russian President Vladimir Putin, saying that officials ‘expect March CPI headline inflation to be extraordinarily elevated due to Putin’s price hike’.

‘We expect a large difference between core and headline inflation reflecting the global disruptions in energy and food markets,’ Psaki said.

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