London
CNN
 — 

The fight against the steep price rises unleashed by the pandemic and war in Ukraine has been long and painful, with central banks hiking interest rates at a scorching pace to try to cool inflation.

Some — like the US Federal Reserve and the European Central Bank — have started to signal that they will soon end their cycle of rate rises, and investors have been only too eager to call the end of the campaign, driving stocks higher as a consequence.

But their optimism may be misplaced. Oil and food prices have jumped in recent weeks, and wages are still growing strongly in some of the world’s biggest economies. The battle to bring inflation down is far from over.

“It would be foolish for any central bank to declare victory,” Randall Kroszner, a former governor of the US Federal Reserve System and now an economics professor at the University of Chicago Booth School of Business, told CNN.

“We’ve seen inflation come down, but we really need to see that this is something that’s going to be sustainably down.”

Inflation around the world began to accelerate in late 2021 as economies re-opened after the pandemic. Price rises then gathered steam following Russia’s full-scale invasion of Ukraine in February last year as global food and energy prices soared.

Overall inflation has slowed sharply in recent months. In the United States, consumer prices climbed 3% in June — a gentle rise compared with a four-decade high of 9.1% hit a year before. Data due Thursday is expected to show that US inflation ticked up to 3.3% in July. Among the 20 countries sharing the euro currency, consumer prices increased by 5.3% in July, exactly half of the record-high inflation reached in October last year.

Inflation has been higher and stickier in the United Kingdom, coming in at 7.9% last month, down from the 11% it clocked in October, a 41-year high.

Major central banks have jacked up interest rates at a record clip over the past 18 months in a bid to curb price rises, even though the tightening campaign has hurt their economies. A so-called “soft landing” — lower inflation but without a full-blown recession — appears to be within sight in the US and the UK. There are also signs that a mild recession in the euro area may already be over.

While central banks should remain “vigilant,” according to Kroszner, he doesn’t see “inflation moving back to [the] peaks that we saw over the last year,” because some of its driving forces -— including supply bottlenecks and big spending by governments during the pandemic -— are no longer at play.

So why are some prices rising again?

Global oil prices have shot up in recent weeks. The price of Brent oil, the global benchmark, has climbed 16% since a low in late June. West Texas Intermediate futures, the US oil benchmark, have risen 19% in that time.

Richard Bronze, co-founder of data provider Energy Aspects, told CNN that he expected crude oil prices to keep “grinding their way higher” on the back of production cuts by major exporters, better-than-expected global demand and relatively low global inventory levels.

“Demand, although not great, is doing better than many of us anticipated at the start of the year,” Bronze said. “We haven’t fallen into a serious recession, and consumer demand for things like flights and travel, and the things that really drive up oil demand are holding up well.”

But he added that oil prices “are not heading up at the same pace or to the same extremes” as last year.

The International Energy Agency has forecast that global oil demand will rise this year to a record 102 million barrels per day on average. But global oil production is expected to rise to 101.5 million barrels per day, the agency said in a report last month.

Contributing to that supply shortfall are sweeping production cuts announced by OPEC+, an alliance of the world’s major oil producers, earlier this year in an attempt to buttress oil prices. Further cuts by the alliance’s leading players — Saudi Arabia and Russia — have added to the upward pressure on prices.

Rising oil prices have spurred a jump in US gasoline prices, which hit an average of $3.82 a gallon Tuesday.

Global food prices have tumbled since July last year, when Russia and Ukraine signed a deal to allow the safe passage of ships carryin