(The hill) – Inflation may have finally peaked after more than a year of supply chain issues, labor shortages and a flood of stimulus that drove prices up .

But the descent from the highest levels of inflation in four decades will be grueling, economists say, posing political challenges for the Biden administration, a cautious balance for the Federal Reserve and a financial crisis for millions of American families.

Consumer prices rose 8.3% in the 12 months to April, according to the Labor Department’s consumer price index (CPI), down slightly from a rate of inflation annual rate of 8.5% in March. The drop was almost entirely due to falling gasoline prices after a spike in March caused by the Russian invasion of Ukraine.

“We believe that March 2022 will have marked the peak of annual inflation,” wrote James Knightley, chief international economist at ING, in an analysis on Wednesday.

Knightley said he expects the annual inflation rate to continue to decline as consumers spend more of their money on in-person services rather than goods tied together in supply chains, a Force Majeure causing the surge in inflation. Used car prices, which soared last year and have remained high since, have fallen sharply since the start of the year and will release some of the pressure on headline inflation figures.

Even so, the road ahead is strewn with obstacles that could keep the prices of crucial goods and services higher deeper into the year, Knightly said.

“We remain nervous about the impact of gasoline and growing pressures on service prices,” Knightley said, pointing to a recent sharp rise in gasoline prices. He added that “substantial declines in the annual rate of inflation are unlikely” until the war in Ukraine deescalates, lockdowns in China ease and labor market participation improves.

“Unfortunately, there are few signs of any of this happening anytime soon.”

The drop in headline inflation does not seem to be a sign of long-term easing.

Gasoline prices hit a new high in May and are expected to continue climbing through the summer as the seasonal spike in energy and fuel consumption comes up against supply constraints and pressures on war-related prizes. The prospect of a European ban on Russian oil and natural gas has pushed up energy prices, with other producers likely to continue raising prices to fill the hole left by Russia.

Rising gasoline prices are also fueling inflation of other goods and services, particularly food and transportation, which involve high levels of travel and energy consumption. Both were among the main drivers of the monthly 0.3% rise in prices in April.

While gasoline prices fell 6.7% on the month, food prices fell 0.9% in April and 9.4% on the year – the largest annual increase in 41 years. Prices for groceries in particular have risen 10.8% over the past 12 months, increasing pressure on cash-strapped households struggling to put food on the table. A record monthly rise of 18.6% in airfare prices and a 0.5% increase in housing costs also played a key role in April’s inflation.

Diane Swonk, chief economist at Grant Thornton, warned that recent double-digit increases in rents and house prices are not yet showing up in the Department of Labor inflation data.

“Much of the spike in housing costs – the largest component of the CPI – is still ahead of us. It takes at least a year for an acceleration in rents and property costs to show up in measures of inflation,” she explained.

The Biden administration and the Federal Reserve are racing to get ahead of inflation as it remains extremely high, but have few good and not easy options to bring prices down.

The Fed is on track to raise its base interest rate range another 1.25 percentage points after two combined 0.75% hikes in March and April. Higher borrowing costs are expected to slow consumer and business spending, which could ease pressure on supply chains overstretched by intense demand. They could also force more Americans into the workforce as savings decline and stock market gains dissipate.

The White House has sought to increase domestic oil production, boost trucking employment, reduce port backlogs and ease some tariffs to unclog supply chains and lower transportation costs.

Even so, supply chain experts say these efforts will bring little immediate relief, as they depend on companies ignoring the uncertain outlook and rising borrowing costs.

“If you see a slowdown in demand coming, you don’t want to hire so much, you don’t want to invest so much, you don’t want to end up with excess capacity,” said Phil Levy, chief economist. to supply chain logistics company Flexport.

“There is a significant lag between when you invest and when you see the results of that investment,” he continued. “You can absolutely get run over if you overdo it.”