The only way for inflation is up from here on the sharp rise in oil prices driven by supply concerns from choked Russian supply and drying up of trade finances from the sanctions imposed by Western countries in response to Russia's invasion of Ukraine.
For well over a year now, price pressures have risen. Until the turn of the year, most major central banks turned a blind eye to higher price pressures and called the rise in inflation transitory.
But major central banks have made a Uturn this year and are set to tighten policy, including higher interest rates.
The Russia-Ukraine border conflict has escalated, with rising worries about the global economic impact of aggressive sanctions against Russia over its invasion of Ukraine.
That crisis has driven oil prices over $100 per barrel on supply concerns.
Crude oil prices jumped over 3 per cent on Wednesday as sanctions on Russian banks following Moscow's invasion of Ukraine hampered trade finance for crude shipments. Some traders opted to avoid Russian supplies in an already tight market.
The latest data from Europe showed price pressures are rising further up.
"German headline inflation increased instead of further retreating in February. According to a first estimate based on the regional inflation data, With the war in Ukraine and continued upward pressure on energy prices, the direction for German inflation has changed: it is no longer down, but up," said Carsten Brzeski, Global Head of Macro at ING.
"Looking ahead, with the war in Ukraine and continued tension and upward pressure on energy prices, headline inflation in Germany will accelerate rather than slow down in the coming months. The pass-through to all kinds of sectors is in full swing," he added.
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