Fuel prices in the United States rose 49 percent between January and June 2022. That jump sat at the center of the worst inflation Americans had seen in more than 40 years.
Gasoline was one of the biggest drivers. Russia’s invasion of Ukraine in early 2022 pushed up global prices for oil, natural gas, fertilizer and food, and oil producers booked record profits as pump prices climbed. Inflation in the United States peaked in the second half of 2022 at its highest rate since 1981, then fell sharply through 2023.
Who felt it most
Economists pointed to food and energy as the main culprits. In 2023 the International Monetary Fund said “food and energy are the main drivers of this inflation,” and warned that rising prices were squeezing living standards across North America and elsewhere.
Low-income households took the hardest hit. William Jackson of Capital Economics said that in countries with high inflation, “consumer spending has weakened because household spending power has taken a hit from rising prices.” When food and fuel eat more of a paycheck, people cut back on everything else, and growth slows.
Other causes in the mix
Gasoline was not the whole story. Pandemic supply chain breakdowns, a rush of spending on goods, government stimulus and housing shortages all fed the surge. In November 2021, inflation for durable goods stood at 14.9 percent, against 10.7 percent for consumable goods and 3.8 percent for services. Researchers at the Federal Reserve Bank of San Francisco estimated that the government’s $5 trillion in aid added 3 percentage points to inflation by the end of 2021.
The Census Bureau found that without housing costs, inflation at the end of 2023 would have been 1.8 percent instead of 3.2 percent.
The response
Central banks across the world, with the Bank of Japan the exception, raised interest rates aggressively. Debate raged over whether price pressures were temporary or lasting. Fed Chairman Jerome Powell had expected inflation to prove “transitory,” even as it rose above 6 percent.
By 2024 the U.S. economy was approaching the Fed’s inflation target while still growing, the outcome economists call a soft landing. As of July 2025 the rate stood at 2.7 percent, against a target of 2 percent.
