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March 14, 2022

Anna Murray 

According to US Labor Department data issued on March 10th, the consumer price index increased 7.9% in February from the previous year, the highest increase since 1982 and likely simply a foreshadowing of substantially higher costs to come. Inflation increased by 0.8% in February compared to the previous month, owing to increasing gasoline, food, and shelter expenses. 

Because of the Ukraine crisis and Biden's restriction on Russian energy imports, oil supplies have been tightened, causing retail gasoline and other commodity prices in the United States to reach new highs this month.

Inflation has outpaced most Americans' income gains in the last year, making it more difficult for them to buy basic needs such as food, gas, and rent. As a result, as the midterm elections approach, inflation has emerged as the most serious political threat to President Joe Biden and congressional Democrats. In surveys, small business owners say it's their top economic concern as well.

To combat rising inflation, the Federal Reserve will raise interest rates many times this year, starting with a quarter-point increase next week, the first since 2018. The Fed, on the other hand, confronts a delicate challenge: if it tightens credit too much this year, it risks undermining the economy and possibly causing a recession. At the same time, the geopolitical environment makes the central bank's rate hike cycle in the coming year more unpredictable.