The February consumer price index rose in February by 7.9% compared to February last year.

The consumer price index calculated by the Ministry of Labor reached a new 40-year high in February. The world’s largest economy continues to suffer from a spike in inflation, which is expected to only worsen due to the consequences of Russia’s invasion of Ukraine.

The February consumer price index rose by 7.9% compared to the same month last year, which was the highest since January 1982. Gasoline, food and housing prices have risen especially strongly, the Ministry of Labor reported.

The Federal Reserve is expected to raise benchmark interest rates next week. However, analysts warn that the sanctions imposed against Russia, which is a major producer of oil and gas, could be another shock to the American economy.

“The Russian-Ukrainian war adds fuel to the fire of incredible inflation rates due to rising prices for energy, food and basic goods, which have sharply increased in price due to worsening supply chain problems,” notes Kathy Bostjancic of Oxford Economics.

Inflation has become a serious problem for President Joe Biden, who gradually lost the support of voters during 2021 due to the steady rise in prices.

In a statement made after the inflation data was released on Thursday, Biden warned of the consequences of “Putin’s price hike” and acknowledged that “it will be costly for the domestic economy.”

“However, Americans should know that the costs we impose on Putin and his henchmen are much more destructive than the costs we face,” Biden said.

American consumers may suffer as a result of the combination of the Fed’s rate hike with rising fuel prices due to the war in Ukraine, according to Rubila Faruki of High Frequency Economics.

“The price shock in the commodity market due to the war in Ukraine – if it continues – may lead to an even greater increase in price indicators,” the High Frequency Economics review says.

Treasury Secretary Janet Yellen acknowledged Thursday that rising prices are a problem, and annual inflation “remains extremely uncomfortably high.”

According to statistics, the consumer price index increased by 0.8% compared to January, which is in line with economists’ expectations, but, nevertheless, the inflation rate only accelerated: in January, the index increased by 0.6%.

A 6.6% jump in gasoline prices accounted for a third of the monthly CPI gain, while food costs increased by 1.4%. This was the biggest increase in both categories since April 2020.

The report says that Americans’ spending on rental housing increased by 0.5% compared to January and by 4.7% over the past 12 months.

Excluding the increase in food and energy prices, the consumer price index last month increased by 0.5% per month, which is slightly less than in January, and increased by 6.4% compared to last year.

The most powerful player in the fight against inflation is the Federal Reserve, whose leaders have made it clear that they will raise benchmark interest rates next week, putting an end to the “easy money” policy put into effect with the start of the COVID-19 pandemic.

Yellen said she is confident that the central bank can “significantly change the situation” and reduce the rate of inflation.

Bostjancic believes that the Fed will repeatedly raise rates this year, but warns that “increased uncertainty and the current shock to financial markets as a result of the war in Ukraine” will force the Fed to act cautiously.

She also says that the jump in oil and gas prices caused by the war and sanctions against Russia “will lead to a higher short-term peak in inflation and a slower decline than previously expected during 2022.”