Treasury Secretary Janet Yellen predicted on Thursday that “very uncomfortably high” inflation will last until the end of the year after Labor Department data released that day showed that inflation spiked to a 40-year high last month.
Yellen told CNBC’s “Closing Bell” that high inflation in the U.S. will likely stretch through the end of 2022, exacerbated by Russia’s invasion of Ukraine.
“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, but added that “we’re likely to see another year in which 12-month inflation numbers remain very uncomfortably high.”
The Treasury secretary’s comments come just hours after the Labor Department released data showing that inflation had reached a 40-year high in February, stoked in part by international sanctions placed on Russia.
The consumer price index rose 7.9 percent in the 12 months ending in February, the highest annual inflation rate since January 1982.
Food prices rose 8.6 percent on the year, rent prices spiked 4.8 percent annually and gas prices rose nearly 7 percent in February alone.
Yellen noted that because both Russia and Ukraine are major wheat producers, the world has seen an impact on food prices amid the invasion, as well as a “very meaningful increase” in gas prices.
“Next month we’ll see further evidence of an impact on U.S. inflation of Putin’s war on Ukraine,” she added.
Yellen said the tough sanctions imposed by the U.S. and its allies against Russia were the result of “an atrocity and peace-loving democratic nations need to and are standing up against it,” but said their impact would be felt by the global community as well.
“We’ve designed these sanctions to have the maximum impact on Russia while mitigating fallout for everyone else,” she told CNBC. “But it’s not realistic to think we can take actions of this magnitude without feeling some consequences ourselves.”