The factor that might cause the inflation rate to spike up sharply is:
Prices on world oil markets rise steeply due to war in the Middle East.
When oil prices rise significantly, it can lead to higher costs for transportation and production, which can subsequently increase the prices of goods and services across the economy, contributing to inflation. The other options would not typically lead to a sharp increase in the inflation rate:
- The items in the CPI market basket change to account for changing consumer buying habits. This change reflects adjusting the basket for consumer preferences but doesn't necessarily cause inflation.
- The purchasing power of the average consumer decreases due to a sluggish economy. This generally suggests deflationary pressures rather than inflation.
- Plentiful rainfall and moderate temperatures result in good harvests of wheat and soybeans. This would typically lead to lower food prices, which could help reduce inflation.