A war in Ukraine could take President Joe Biden’s inflation crisis and cause it to spiral even further out of control, according to one of America’s biggest accounting firms.
A new analysis by RSM, one of America’s leading audit, tax and consulting firms, found that inflation in the U.S. could jump to over 10% on a year-over-year basis if war in Ukraine further pumps up the cost of oil. The analysis, first shared with CNN, found that oil prices could reach as high as $110 per barrel due to the conflict.
🇺🇸 Russia-Ukraine conflict could cause inflation to hit 10%, new analysis finds https://t.co/E4yDKQOOsa
— Neil Saunders (@NeilRetail) February 16, 2022
“We’re talking about a real short-term shock,” RSM chief economist Joe Brusuelas told CNN. “Heating the home and putting gasoline in the car will become more expensive in the immediate aftermath of a Russian invasion.”
The U.S. hasn’t seen year-over-year inflation above 10% since 1981. But current levels are already around 7.5%, and Brusuelas said a 20% increase in oil prices to $110 a barrel could add nearly 3% of inflation, taking it over the 10% threshold.
Russia is the second biggest supplier of oil and natural gas in the world, providing a significant share of fuel to Europe. JPMorgan has warned that any disruption in the Russian oil industry could send prices soaring north of $120 a barrel, according to CNN.
Inflation has already been an issue dragging down Biden’s approval ratings, and an invasion that exacerbates the crisis couldn’t be much more poorly timed than now, as a midterm election approaches. (RELATED: Consumer Spending Surged In January As Inflation Reached Near 40-Year High)
Biden threatened last week that if Russia carries out a physical attack against Ukraine, he will do everything possible to shut down the Nord Stream 2 pipeline, which will carry gas from Russia to Germany.