Higher food and oil prices as a result of Russia’s invasion of Ukraine could send US inflation to the highest annual level since 1981, based on estimates of the impact on global supplies from Wells Fargo.
If oil remains above $100 a barrel and the Commodity Research Bureau Food Index increases 35% from the end of last year, it would add 1.3 percentage points to the consumer price index this year, according to a research note Thursday from economists led by Sarah House.
Average annual CPI is forecast to rise 5.1% in 2022 after increasing at a 4.7% pace last year, according to a Bloomberg survey of economists.
Brent oil is already trading above $110 a barrel, as of Thursday afternoon. And the CRB food index, a measure of global commodity prices, is halfway through the Wells Fargo estimate, up 18% from the last year’s fourth-quarter average.