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Americans get more bad news on inflation
An inflation gauge monitored by the US government is at a 40 year high,
and the Ukraine situation could make matters worse
An inflation gauge monitored by the US Federal Reserve made a year-to-year jump of 6.1% in January, according to data released by the Commerce Department on Friday. The increase is its biggest since 1982, and it’s the latest sign that Americans will continue to be impacted by the rising costs of goods.
The figure comes from the personal consumption expenditures (PCE) price index. According to the data, consumer spending did rise in January over the previous month, despite incomes largely staying flat. Consumers upped their spending by 2.1% while average incomes only rose by an average of 0.1%. In December, consumer spending had fallen 0.8%.
American consumers could be hit with more bad news as the Ukraine crisis continues. When announcing his latest batch of economic sanctions on Russia over the country’s decision to attack its neighbor, US President Joe Biden acknowledged that Americans’ wallets could soon be affected.
In his speech, Biden said there would be a cost for both Russia and the US, but his administration is working to push back against potential energy price bumps, which would continue a trend Americans have faced for a year now. Gas currently stands at an average of $3.57 a gallon – a jump from $2.68 per gallon a year ago.
Moscow’s military assault on Ukraine could also lead to complications in oil exports from Russia and lead to more price hikes for Americans, experts have warned. Products made in Ukraine, like wheat and aluminum, have also seen their rates rise, the Associated Press noted on Friday.
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With China and India onside, Russia, pushed by US sanctions, is undermining the US dollar as the standard for world trade. This could potentially be a major disaster for the American economy. Lower demand for the US dollar would deflate its value and provoke rapid inflation.
India wants to bypass dollar to keep trading with Russia
New Delhi considering switching to rupee-ruble settlements amid sanctions on Moscow
India is in search of efficient tools to skirt around the latest penalties imposed on Russia over the conflict in Ukraine, as New Delhi looks to keep trade with Moscow going, Indian media reports.
Among the options reportedly being considered are making settlements via foreign financial institutions that don’t operate in countries that have supported the punitive measures against Russia, routing payments through minor Russian lenders unaffected by the SWIFT ban, and boosting its rupee-ruble arrangement.
Russian banking majors Sberbank and Gazprombank have been exempted from the latest sanctions so far due to their essential role in processing payments for the EU’s gas and oil imports from Russia.
“We are looking into this. Even if these banks face sanctions from the US, payments can be made in euros as these transactions are still being carried out until further sanctions,” said a government official, as quoted by The Economic Times.
The official added that the full impact of the latest penalties against Russia is yet to be felt.
Repaying Russian debt through a rupee auction held by the Bank of Russia is reportedly another option under consideration. Such a repayment is made through the exports of identified commodities and services.
In 2014, India and Russia agreed to make payments through the rupee-ruble trade after India faced a threat of secondary sanctions over a defense agreement with Russia. Washington has once again threatened New Delhi with sanctions over the arms deal this week.
Bilateral trade between India and Russia amounted to $8.1 billion in the fiscal year ended March 2021, with exports to Russia at $2.6 billion and imports at $5.5 billion.
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US plotting unilateral ban on Russian oil imports – media
The Biden administration reportedly plans to seek the ban despite gas price hike
The White House reportedly plans to ban all Russian oil imports to the US, even if it cannot secure the EU’s backing on the matter, two people familiar with the issue told Reuters on Monday. US President Joe Biden will bring up the topic during a Monday conference call with his French, German, and UK counterparts in which he hopes to gain their support.
A senior US official confirmed to Reuters that if legislation banning Russian imports does pass, “it is likely just the US.”
Europe is already dealing with record-high oil and natural gas prices due to sanctions placed on Russia following its invasion of Ukraine, setting an all-time record of €345 per megawatt-hour for natural gas futures. The US is also seeing energy prices surge, with gas expected to surpass its all-time high of $4.103 per gallon later this week. Global oil prices have soared to the highest level since the 2008 financial crisis, topping out at $140 per barrel for Brent crude.
These eye-popping figures haven’t stopped the US from racing to ban Russian energy imports. A bipartisan group of senators led by Joe Manchin (D-West Virginia) and Lisa Murkowski (R-Alaska) introduced a bill last week to ban imports of Russian oil by declaring yet another national emergency, and the bill is expected to be fast-tracked.
The House is also “exploring” the possibility of banning Russian oil imports, according to a Sunday letter from Speaker Nancy Pelosi, and another massive aid package - this one totaling $10 billion - is expected to be sent off to Ukraine while Americans struggle to pay rent and put food on the table under significantly high inflation.
While America’s reliance on Russian oil and gas is less than that of Europe, with under 7% of its oil supplied by Moscow, a ban would still push fuel prices higher worldwide. The Biden administration has released 30 million barrels of oil from the country’s strategic reserves in an effort to keep prices down, while some Democrats have considered a temporary “gas tax holiday” to ease the squeeze on drivers’ wallets.
The White House is rumored to be planning a trip to Saudi Arabia to push Riyadh to increase oil production in order to lower the price at the pump for Washington’s European allies, according to Axios, though a White House official denied any such trip was planned.
Any country or company in the oil business must be grinning from ear to ear. The staggering profits help with the Great Reset in continuing to move wealth from the middle class to the oligarchs. It's going to get worse before it gets better. In fact, it might never get better.
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