US inflation is at a 40-year high. Russia’s war will only make it worse
“I will not pretend this will be painless,” Joe Biden warned Americans before Russia’s invasion of Ukraine. And as the war disrupts already hard-hit international trade, US consumers are likely to soon see just how painful the consequences of the conflict will be in the US.
Inflation is already at a 40-year high in the US and, depending on the length and depth of Russia’s war, any further disruption could cause prices to rise at the pump and perhaps on store shelves.
The invasion could also have potential long-term implications for Biden’s green energy transition since a significant amount of key metals are mined and produced there, including nickel, palladium and aluminum.
While US-Russian trade is relatively small, the country is home to a broad range of natural resources, from crude oil to wheat. Prices for those natural resources soared following Russia’s incursion, although most are off the highs they hit when the invasion began.
On Thursday, Nymex futures prices for the most active crude oil and gasoline contracts – an indication of the future cost of buying oil – spiked to their highest levels since July 2014, with the US benchmark West Texas Intermediate briefly touching $100 a barrel and reformulated gasoline prices rising as high as $3.07 a gallon.
Wheat prices continued their climb on Friday as fighting continued. Chicago Board of Trade wheat prices were trending higher before Russia’s invasion, but spiked higher still on Thursday and Friday, rising at one point to their highest level since April 2008.
Russia and Ukraine collectively are known as Europe’s breadbasket, responsible for 30% of the world’s export supply of wheat. Much of that is shipped through the Black Sea to the Middle East and African countries,
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