Russia’s invasion of Ukraine has fueled price increases on top of months of inflation. We’ll also look at the White House bracing for a tough inflation report and an uphill climb to legalize cannabis.
But first, find out why Kevin Bacon popped up in D.C. over the weekend.
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How the Russia-Ukraine war is driving up prices
Russia’s invasion of Ukraine and the resulting sanctions imposed on Moscow are contributing to surging global prices that Americans are feeling throughout the economy, particularly at the grocery store and the gas pump.
Russia’s status as a major exporter of raw materials, especially oil and natural gas, along with Ukraine’s position as a key agricultural supplier to regions including Africa and the Middle East, make the conflict between the two countries a flashpoint for commodity prices, which were already on the rise due to the pandemic.
- New consumer price index (CPI) data to be released Tuesday by the Labor Department is likely to show another sharp jump in both monthly and annual inflation.
- Consumer prices rose by 7.9 percent in the year ending in February, and signs of high inflation in March are mounting.
“These countries export a lot of raw materials,” William Reinsch, a former undersecretary of Commerce who now serves as international business analyst at the Center for Strategic and International Studies, said in an interview. “They tend to have a world price. And so when supply is constricted, the consequence for Americans is that the price goes up because it goes up everywhere.”
- On Friday, the Food and Agriculture Organization (FAO) of the United Nations recorded a 12.6 percent increase in its benchmark food price index from February to March, an uptick it described as a “giant leap.”
- The March numbers represent all-time highs for cereal grains, vegetable oils and meats, while the sugar and dairy sectors also saw major gains.
- The war in Ukraine also accelerated a steady rise in oil prices driven largely by the recovery from the pandemic. Fuel oil prices rose 6.7 percent and gas prices rose 6.6 percent in February alone, according to the CPI as crude oil prices rose toward $100 per barrel.
LEADING THE DAY
White House braces for ‘extraordinarily elevated’ inflation numbers
The White House is bracing for “extraordinarily elevated” inflation numbers to be reflected in Tuesday’s data from the Labor Department, attributing it largely to rising energy costs stemming from the Russian invasion of Ukraine.
Monthly data from the consumer price index (CPI), a key gauge of inflation, is due out on Tuesday, and White House press secretary Jan Psaki said officials are prepared for heightened numbers.
“Because of the actions we’ve taken to address the Putin price hike, we are in a better place than we were last month,” Psaki said, indirectly referring to releasing additional oil from the Strategic Petroleum Reserve and calls for oil companies to avoid price gouging.
“But we expect March CPI headline inflation to be extraordinarily elevated, due to Putin’s price hike,” Psaki continued.
- The average cost of a gallon of regular gas is $4.11 as of Monday, according to AAA. That number is down slightly from a month ago, when the average price per gallon was $4.33, but it is still up roughly 50 cents from early March.
- Psaki pushed for Congress to pass the administration’s proposals on prescription drug pricing, child care and other areas that would reduce costs for families and help mitigate the effects of rising costs for energy and food.
Rising prices for food, energy, shelter and a wide range of consumer goods have squeezed household budgets amid an otherwise strong recovery from the COVID-19 pandemic. Administration officials have largely chalked it up to the war in Ukraine, which has roiled global energy markets and upended food supply chains.
The Hill’s Morgan Chalfant has more on this here.
TOUGH SLEDDING
Democrats face tough climb on winning Senate approval of legal marijuana
Senate Majority Leader Charles Schumer (D-N.Y.) is facing significant obstacles in his legislative push to legalize marijuana, with resistance from Republicans and members of his own party threatening chances of passage in the upper chamber.
Schumer has said that his aim is to bring a comprehensive marijuana reform bill forward later this month, weeks after the House passed a bill that would remove marijuana from the federal controlled substances list.
Staunch Republican opposition to legislation legalizing marijuana is one of the biggest hurdles Schumer faces in passing a measure through the evenly split Senate, where Democrats would need the backing of all of their members and at least 10 Republicans to make the bill law.
- Schumer will also struggle to unify Democrats on a path forward, as Sens. Joe Manchin (D-W.Va.) and Jeanne Shaheen (D-N.H.) expressed reservations about recreational marijuana last week.
- Cannabis executives, wary that the bill won’t pass the Senate, are pushing Schumer to prioritize bills that have bipartisan support, like the SAFE Banking Act, which would enable operating cannabis firms to use banking services.
Aris and Karl have more here.
VIRTUAL EVENT INVITE
The Hill’s Future of Jobs Summit — Tuesday, April 12 at 1:00 PM ET
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LAST DITCH PITCH
Small business groups push for antitrust reform
Fifteen organizations representing small business interests on Monday sent a letter to congressional leadership calling for a raft of antitrust bills to be brought to the floor.
The bills, approved by the House Judiciary Committee last year on a bipartisan basis, are crucial to addressing the monopoly power of America’s largest tech companies, the groups led by the progressive Institute for Local Self-Reliance nonprofit argue.
“Concentrated market power is the single biggest threat facing independent businesses, and the status quo in our digital markets is untenable,” the letter reads.
- The push from small business groups comes as tech companies and their trade organizations have ramped up their lobbying opposing antitrust reform bills.
- The bills advanced by the House committee have yet to get a floor vote amid lack of clear support from leadership, as well as opposition from some California Democrats.
The Hill’s Chris Mills Rodrigo has more here.
Good to Know
House of Representatives cafeteria workers say their working conditions have become untenable, leading to unsanitary conditions in the kitchens that serve Congress.
For months, workers in the House of Representatives’ multiple cafeterias have been denouncing the working conditions imposed by Sodexo, the cafeteria services contractor, but their pleas have fallen mostly on deaf ears.
Here’s what else we have our eye on:
- Consumers’ expectations of short-term inflation rose to a record high last month, according to new data released Monday by the Federal Reserve of New York.
- The country’s average gasoline price has dropped about eight cents over the past week, and about 13 cents over the last two weeks, according to figures from the American Automobile Association (AAA).
- Inflation has emerged as a central factor as Congress prepares to negotiate how much money it should appropriate to the Department of Defense in fiscal year 2023.
- The majority of Americans are in favor of six recent climate change proposals from the Biden administration, according to the annual Gallup environment poll released Monday.
- While COVID-19 cases have remained low in the U.S. since the decline of the omicron wave this winter, the “stealth” BA.2 variant has reached the U.S. and is causing a rise in cases in some parts of the country, particularly in regions of New York state.
- The city of Philadelphia has announced it will reinstate its indoor mask mandate later this month as COVID-19 cases climb in the city.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.