(The Hill) – Inflation may have finally peaked after more than a year of supply chain snarls, labor shortages and a flood of stimulus driving prices higher. 

But the climb down from the highest levels of inflation in four decades will be grueling, economists say, posing political challenges for the Biden administration, a careful balancing act for the Federal Reserve and a financial crunch for millions of U.S. families.

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

“We think that March 2022 will have marked the peak for annual inflation,” wrote James Knightley, chief international economist at ING, in a Wednesday analysis.

Knightley said he expected the yearly inflation rate to continue to fall as consumers spend a greater share of their money on in-person services instead of goods snarled in supply chains, a major force behind the inflation surge. Used car prices, which spiked last year and have remained high since, have fallen sharply since the start of the year and will let out some of the pressure on overall inflation numbers.

Even so, the road ahead is laden with obstacles likely to keep prices for crucial goods and services rising deeper into the year, Knightly said.

“We remain nervous about the impact from gasoline and the growing price pressures within services,” Knightley said, pointing to a recent, sharp increase in gas 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 force participation improves.

“Unfortunately, there is little sign of any of this happening any time soon.”

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

Gas prices hit a new high in May and are expected to keep climbing into the summer as the seasonal surge in energy and fuel usage runs into war-related supply constraints and price pressures. The prospect of a European ban on Russian oil and natural gas has sent energy prices soaring, with other producers likely to keep ramping up prices to meet the hole left by Russia.

Higher gas prices also fuel inflation for other goods and services, especially food and transportation, which involve high levels of travel and energy usage. Both were among the primary drivers of April’s 0.3 percent monthly increase in prices overall.

While gas prices fell 6.7 percent on the month, food prices fell 0.9 percent in April alone and 9.4 percent on the year — the steepest annual increase in 41 years. Prices for groceries in particular rose 10.8 percent over the past 12 months, ramping up pressure on cash-strapped households struggling to put food on the table. A record 18.6 percent monthly spike in airline ticket prices and 0.5 percent increase in shelter costs also played key roles in April’s inflation.

Diane Swonk, chief economist at Grant Thornton, warned that recent double-digit climbs in rents and housing prices are yet to appear in the Labor Department’s inflation data.

“Much of the surge in shelter costs — the largest single component of the CPI — are still ahead of us. It takes at least a year for an acceleration in rents and homeownership costs to show up in inflation measures,” she explained.

Both the Biden administration and Federal Reserve are racing to get ahead of inflation as it remains punishingly high, but have few good and no easy options to bring down prices.

The Fed is on track to raise its baseline interest rate range an additional 1.25 percentage points after two hikes of a combined 0.75 percent in March and April. Higher borrowing costs are likely to slow consumer and business spending, which may ease pressure on supply chains overloaded by intense demand. They could also force more Americans into the job market as savings dwindle and stock market gains dissipate.

The White House has sought to expand domestic oil production, boost employment in trucking, reduce port backlogs and ease certain tariffs as a way of unclogging supply chains and reducing transportation costs.

Even so, supply chain experts say those efforts will yield little immediate relief because they depend on businesses ignoring an uncertain outlook and rising borrowing costs.

“If you see a downturn in demand coming, you don’t want to hire as much, you don’t want to invest as much, you don’t want to get caught out with excess capacity,” said Phil Levy, chief economist at supply chain logistics firm Flexport.

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