Treasury Secretary Janet Yellen warned there could be another year of high inflation amid uncertainty over invasion of Ukraine. Prices have risen at their fastest pace in 40 years over the past 12 months.
“We are likely to see another year in which 12-month inflation figures remain very uncomfortable,” Yellen said in an interview with CNBC. Yellen, who previously said he expected price increases to slow during the second half of the year, said Thursday he does not want to make a prediction about the second half of this year.
The latest data from the Department of Labor show this consumer prices went up 7.9% in February compared to a year ago, the largest annual increase since January 1982. Prices rose 0.8% last month, an acceleration from January, as energy prices rose with the crisis between Russia and Ukraine.
Yellen said Thursday that the situation in Ukraine has worsened inflation, causing what he called a “very significant rise in gas prices.” He said he expects next month to show “further evidence of the impact of Putin’s war on Ukraine on US inflation.”
Apart from oil, the Secretary of the Treasury noted that Ukraine and Russia are the main producers of wheat, which could affect the cost of food. Russia is a major exporter of nickel and other minerals, which could lead to further price increases in both Europe and the United States.
The Americans had been struggling with high inflation even before the invasion, as the United States is facing supply chain bottlenecks and the shortage of the coronavirus pandemic. Inflation rose 7.5% year-on-year in January.
Despite the largest price increases the U.S. has seen in 40 years, Yellen said the economy remains strong and does not expect the U.S. to experience inflation.
“Stagflation usually means high inflation combined with a weak economy. And I think the job market will stay strong,” Yellen said.
The US economy added 678,000 jobs last month, and more than 6.6 million jobs last year. The unemployment rate in February dropped to 3.8%.
Americans continue to do the same quit your job in almost record numbers, indicating that they are confident of finding another job.
White House Press Secretary Jen Psaki said on Thursday that the administration is doing everything possible to reduce costs and make sure there is no long-term impact of inflation. The Biden administration previously released millions of barrels of oil from Strategic Oil Reserves to help alleviate high gas prices and took steps to help move goods faster through ports as demand remains high.
Next week, the Federal Reserve is expected to raise interest rates to combat rising prices. Said Federal Reserve Chairman Jerome Powell would propose a 0.25% interest rate hike.. Nor did it rule out higher interest rate hikes at future Fed meetings.
Yellen, who previously served as head of the Federal Reserve, said Thursday that he is confident in the central bank’s ability to make a “significant difference in the future.”
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- economy
- Inflation
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