American consumers are already struggling with the highest inflation in four decades — a phenomenon that is eating into buying power and eroding wages. But more economic pain may be in store, with one analyst estimating that the recent surge in gas prices following Russia’s invasion of Ukraine could add up to $2,000 in annual costs to the typical household budget. CBS News reports:
The average cost for a gallon of regular gasoline has surpassed $4 per gallon for the first time since 2008. Many consumers have seen prices at the gas pump rise swiftly, with the price of regular gas jumping 41 cents during the first full week of Russia’s war in Ukraine, according to AAA.
That will likely cost the typical household an additional $2,000 per year in gasoline costs, according to Yardeni Research in a Monday research note. That comes on top of about $1,000 in extra costs at the grocery store due to inflation, which means the typical household will have $3,000 less this year to spend on other items, Yardeni said.
Consumers are fretting about the impact on their budgets — with some already planning to cut back on driving, and watching their spending. That could pose a threat to the pandemic’s economic rebound, given that personal consumption contributes about 70% of gross domestic product, according to the Federal Bank of St. Louis.