Yellen: Russia’s Attack Could Keep Inflation High for Another Year

Russia’s attack on Ukraine has upended the likelihood that high inflation will be leveling off any time soon.

“I think there’s a lot of uncertainty that is related to what’s going on with Russia in Ukraine,” Treasury Secretary Janet Yellen told CNBC. “And I do think that it’s exacerbating inflation.”

See also: Inflation Soars 7.9% to Another 40-Year High

Consumer prices have been steadily rising, with the Labor Department’s latest report showing an increase of 7.9%, a number not seen since 1982.

Earlier this year, Yellen expected that with supply chain issues fixed, inflation would cool before the start of the new year. But that was before Russia’s military offensive began.

“I don’t want to make a prediction exactly as to what’s going to happen in the second half of the year,” Yellen told CNBC. “We’re likely to see another year in which 12-month inflation numbers remain very uncomfortably high.”

Read more: Latest Inflation Data: Paycheck-to-Paycheck Consumers Will Have to Make Tough Choices

Yellen pointed to the hike in gas prices and said, “my guess is that next month we’ll see further evidence of an impact on U.S. inflation of Putin’s war on Ukraine.”

“Russia, in addition to exporting oil … Ukraine and Russia are major producers of wheat,” she told CNBC. “We’re seeing impacts on food prices, and I think that can have a very severe effect on some very vulnerable emerging market countries.”

Despite record-high inflation and the ongoing Russian invasion, Yellen was optimistic about the overall economy going forward.

“We’ve got a good strong economy with an excellent outlook for the labor market and real activity going forward. Inflation is a problem, and it’s one that we need to address, but I don’t expect a recession in the United States,” Yellen said.