In February, core consumer prices rose 6.4% from a year earlier, the highest rate in 40 years. The core CPI (consumer price index) does not include food and energy prices since those tend to be volatile and somewhat seasonal.
Including food and energy, total consumer prices were up 7.9% in February and that was before the Russian invasion of Ukraine sent another shock to the system. That is a significant difference, but economists have previously focused on core consumer prices because that usually even out over time, with energy and food prices fluctuating both up and down.
Yet, we may need to reexamine the way we think. Even before the Russian invasion, the energy sector had changed. The drive for green energy pushed prices and inflation expectations higher (expectations a driver of what employees expect in wages because of what they expect to pay to live). With green energy not developed to the point that it can compete with current energy alternatives, that pushes prices higher and the governmental drive away from fossil fuels is not likely to decline. That means that increased energy prices are likely a new way of life. Since the agriculture industry is heavily influenced by the cost of gas, then there is a ripple effect.
Add to that the impact of Russian adventurism and that Russia is a major oil and gas exporter, and the short-term impact is sure to affect the living standards of working families. Shocks at such a fundamental level also have the potential to have broader implications in society.