The Russian invasion of Ukraine and the sanctions that it triggered is behind more than a third of the 40-year high inflation of 8.6%, according to analysis from a leading forecaster.
Mark Zandi, chief economist at Moody’s Analytics, says after decomposing the numbers, the Russian invasion represented 3.5% year-over-year growth, mostly through the direct of higher commodity prices. But, he added on a podcast by the firm that higher diesel prices causes food prices to be higher, and it’s also bleeding into things like airfares.
The COVID-19 pandemic, he said, represented 2% year-over-year growth, mostly through supply chains.
“The bulk of the supply chain constraint component on CPI is new and used vehicles, but it also includes bedding, furniture, children’s apparel, things that are really affected by the supply chains,” added Ryan Sweet, senior director at Moody’s Analytics.
The lack of affordable housing is further responsible for 0.6% year-over-year price growth, according to Moody’s calculations.
He said the American Rescue Plan, the stimulus plan that President Biden signed into law, had a negligible impact.
In all, Zandi says the typical American household is paying $460 per month more to buy the same goods and services that they would have at the same time last year.
Cris DeRitis, deputy chief economist, said the inflation readings may not have peaked. “But as we get past the summer, past the summer driving season, I think then you might to see some of that moderation,” he said. “It’s just a matter of time.”