Record US inflation likely near peak level, analyst says

By Ovunc Kutlu

ANKARA (AA) - US consumer inflation has likely hit its peak after spiking to its highest level in more than 40 years, and it will soon fall, according to an expert.

Annual consumer inflation rose 7.9% in February, marking the largest 12-month increase since January 1982, according to the Labor Department.

The consumer price index was in line with market estimates after it rose 7.5% in January.

"The likelihood is we're near the peak which could come next month," Craig Erlam, London-based senior market analyst for UK & EMEA at trading platform OANDA, told Anadolu Agency in an email.

"This leaves little doubt that the Fed will raise rates next week and at the upcoming meetings though as it hopes to get to grips with inflation having already ignored it for too long," he added.

The Federal Reserve insisted last year that inflation is “transitory” but removed that word from its monetary policy statement in late 2021 and signaled it would raise rates in 2022.

After the Labor Department said consumer inflation rose to its highest in more than four decades, the probability of a 25 basis points hike soared to 94% at 4 p.m. EDT Thursday, according to the FedWatch Tool provided by US-based global markets company, Chicago Mercantile Exchange (CME) Group.

Erlam said nearing peak inflation, however, "won't comfort those feeling the squeeze as a result of these widespread price increases, especially when faced with much higher energy prices."

"But, the trajectory should start to look more promising after that," he added.

On an annual basis, the US price indices for energy, gasoline, natural gas, and electricity were up 25.6%, 38%, 23.8%, and 9%, respectively, according to Labor Department figures.

"Today’s inflation is ubiquitous, deep, and lasting," Patrice Onwuka, the director of the Independent Women's Forum (IWF) Center for Economic Opportunity, said in an email to Anadolu Agency.

"Americans cannot escape rising prices for everyday necessities at the pharmacy, grocery store, and gas pump or to keep a roof over their heads," she added.

President Joe Biden blamed Vladimir Putin for last month's record inflation, saying Americans' budgets are being stretched by price increases and families are starting to feel the impacts of Putin’s price hike.

"Today’s data was captured before Russia’s Ukraine invasion sent shock waves across international energy markets, so real-time inflation is likely worse," said Onwuka. "The Biden administration’s fiscal and energy policies have fueled rising prices. More federal spending will only drive prices higher and increase hardship on American families."

Onwuka argued that eroding purchasing power and reduced savings will start to decrease the quality of life for Americans as families are forced to make tough budget decisions as they will spend more of their income proportionately on necessities like groceries and gas.