Home Business US inflation reaches 8.5% over one year, the highest for forty years

US inflation reaches 8.5% over one year, the highest for forty years

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American consumers keep seeing prices go up. The month of March 2022, the first to be fully affected by the repercussions of the war in Ukraine, on energy in particular, obviously does not help matters and records a further acceleration in inflation.

A “Putin effect”

The rise in prices, according to the CPI index published on Tuesday, April 12, reached 8.5% in March over one year. A further increase from 7.9% in February, which was already the highest measurement for forty years.

“The Russian invasion of Ukraine has really added risks” for inflation, notably via “energy, food and also the high risks that supply bottlenecks persist longer”said Pooja Sriram, economist for Barclays.

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→ ANALYSIS. Inflation: a year of soaring food prices

The White House had warned on Monday that the rate would be “extraordinarily high”. The US executive has since announced a series of initiatives to increase biofuel use and production in hopes of lowering prices at the pump.

After already allowing historic drawdowns from America’s strategic oil reserves, President Joe Biden finds himself running out of levers to stem what the White House invariably calls “The Putin Effect” on inflation, in a so far unsuccessful attempt to mitigate the political cost to the Democrat.

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A coming slowdown?

Some economists do not see inflation slowing down for several months. Others, on the other hand, expect a slowdown to begin in April. March “will be the peak, as a sequence of strong increases in spring and early summer last year creates an extremely favorable comparison effect”notes Ian Shepherdson, economist for Pantheon Macroeconomics, who expects a slowdown to 6% by July, then to 3% by January 2023.

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