Soaring fuel prices that prompted the US Federal Reserve's quarter percentage point interest rate increase, could also add $125 billion to US transportation costs, according to a report by Wood Mackenzie.
The report noted that the US economy was healthy, citing a projected GDP growth rate of 2.3% for the year, alongside low unemployment at 4.1%. However, analysts at Wood Mackenzie expressed concern about higher fuel costs for consumers stoking inflation.
Analysts highlighted Brent's surge from $60 a barrel at the beginning of this year to $101 per barrel on Monday, which has pushed average retail gasoline prices to $4.48 per gallon, up 40% in a year, the American Automobile Association said.
Diesel price increases have been even sharper, with disruption to Russian exports leading prices to surge 76%, to $6.51 a gallon across the country.
Wood Mackenzie warned that if diesel prices remain at current levels for a year, the 45 billion gallons consumed annually by the US transportation sector would translate into an additional cost of about $125 billion, equivalent to 0.4% of US GDP. The biggest impact is set to be on the agriculture and fishing.