Treasury Secretary Janet Yellen said Americans should prepare for a year of “uncomfortably high” inflation amid surging gas and commodity prices linked, in part, to Russia’s invasion of Ukraine.
Her comments came the same day the Biden administration said the Consumer Price Index surged 7.9% in February, the fastest increase since the early 1980s. The rise was driven by spikes in food and rent costs, and the Bureau of Labor Statistics said that figure would likely become more pronounced in March due to the Russian attack on Ukraine and its repercussions.
“We’ve seen a very meaningful increase in gas prices, and my guess is that next month we’ll see further evidence of an impact on U.S. inflation of Putin’s war on Ukraine,” Yellen said Thursday on CNBC’s “Closing Bell.” “I think there’s a lot of uncertainty that is related to what’s going on with Russia in Ukraine. I do think it’s exacerbating inflation.”
She added that she doesn’t believe a recession is on the way in the U.S., saying the labor market remains strong with households in “good financial shape.”
Gas prices have jumped nationally by about 62 cents a gallon on average to $4.32, squeezing lower-income Americans at a time when surging costs have already hit pocketbooks nationwide. The rise in consumer goods far outstrips many pay raises workers may have received and presents an ongoing challenge to President Joe Biden with the midterm elections coming up in November.
“As I have said from the start, there will be costs at home as we impose crippling sanctions in response to Putin’s unprovoked war, but Americans can know this: The costs we are imposing on Putin and his cronies are far more devastating than the costs we are facing,” the president said after the release of the February inflation report.
Yellen said Thursday that she couldn’t predict what would happen in the second half of the year if Russian President Vladimir Putin’s invasion drags on but said she has confidence that the Federal Reserve will be able to make a “meaningful difference going forward” to help keep inflation down.
“I don’t want to make a prediction exactly as to what’s going to happen in the second half of the year,” she said, adding: “You know, we’re likely to see another year in which 12-month inflation numbers remain very uncomfortably high.”