Inflation rates in the crypto market are predicted to increase following the statement of the White House Press Secretary Jen Psaki last April 11 that the US government’s March consumer price index (CPI) headline inflation is to be ‘extraordinarily’ elevated due to Putin’s price hike on gasoline.
Psaki said that the White House is expecting a ‘large difference between the core and the headline inflation, reflecting the global disruptions in energy and food markets’ which are caused by Russia’s war against Ukraine.
According to data forecasted by the FXStreet on Tuesday, April 12, the CPI or change in prices of different goods and services for a specific group of households in the US increased by up to 7% in February followed by an 8.3% increase in March. The 8% figure in March is the first in four decades, thus it put the White House on high alert.
The data also suggest that the core inflation responsible for renouncing volatile energy and components is expected to rise to 6.6% compared to the year before.
In the White House Press, Psaki mentioned that the disparity between the two metrics is a result of the ‘abnormally high’ increase in the price of gas seen last month. According to Psaki, the price of gas is at least $1 above the pre-invasion level. This approximately 25% increase in gas price dictated the inflation reading for April 12.
The White House has announced the data ahead of time to reassure the market before the expected bump in the headline CPI regarding food and energy components.
In a report published on April 5 by the Board of Governors of the Federal Reserve System, Federal Reserve Governor Lael Brainard said that ‘bringing inflation down is of paramount importance’. In the same report, the governor indicated that the Federal Reserve would favour increasing interest rates and a rapid balance sheet runoff to keep the US monetary policy at a more ‘neutral’ position.
Psaki’s statement was indicative that Biden’s administration is expecting the headline inflation to cool off as the panic in the energy market subsided. This April, the American Automobile Association announced that the price of gas in the US has pulled back to $4.11 per gallon compared to its all-time high price on March 11 which reached $4.33 per gallon.
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