Treasury Secretary Janet Yellen said Thursday that Americans are likely to see another year of “uncomfortably high” inflation as Russia’s invasion of Ukraine muddies her earlier predictions that The price acceleration will abate in the coming months.
“I think there’s a lot of uncertainty associated with what’s happening with Russia in Ukraine,” Yellen told CNBC’s Close Bell.
“And I think that exacerbates inflation. I don’t want to predict exactly what will happen in the second half of the year.” “We are likely to see another year in which the 12-month inflation numbers remain very alarmingly high.”
The Treasury secretary’s comments came just hours after the Labor Department released its latest gauge of how quickly prices are rising for American consumers. The report showed that Consumer prices rose 7.9% in 12 monthsThat ends in February, the fastest rate of inflation since 1982.
The comments also come just months after Yellen told CNBC that she expects inflation to moderate towards the end of 2022 as supply chain issues are resolved and consumer demand for the goods is met.
It was reluctant to issue a similar forecast on Thursday. Yellen said Russia’s attack on Ukraine has created more uncertainty and raised prices for many commodities including crude oil and Wheat.
Crude oil futures contracts It jumped to multi-year highs earlier this week as the Kremlin intensified its attack on Kyiv, sending the price of West Texas oil for April delivery to nearly $130 a barrel on Tuesday. It has fallen somewhat since then and was last trading around $105 a barrel on Thursday.
But the price is still about $30 a barrel higher than it was three months ago.
“We’ve seen a very large increase in gas prices, and I think in the next month we will see more evidence of the impact of Putin’s war on Ukraine on inflation in the United States,” Yellen said.
“Russia, in addition to exporting oil, Ukraine and Russia are major wheat producers,” she added. “We are seeing impacts on food prices, and I think that could have a very severe impact on some very vulnerable emerging market countries.”
The Treasury Department spearheaded the Biden administration’s economic sanctions against Moscow, denying the country access to US dollars and preventing access to much of the global banking system.
Yellen said the series of sanctions against Russia has been overwhelming and that she continues to consult with her counterparts around the world on how to toughen sanctions if necessary.
“I think the impact of sanctions is devastating to the economy,” Yellen said. “We have almost cut off Russia from the international financial system,” he added.
“The export controls we have put in place will have a devastating longer and mid-term effect in depriving Russia of the technology it needs to run a modern economy and advances in defense and other areas,” she said. “Russia is experiencing very serious economic consequences. I expect there will be a sharp slowdown in the Russian economy.”
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”