React Native init fails on cocoapods install

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I am facing a rather strange bug. If I react-native init through my terminal, cocoapods installs fine. If I init a new project through vscode's integrated terminal, I get this error during pod install:

    For help, see: https:/nodejs.org/en/docs/inspector
Debugger attached.
Waiting for the debugger to disconnect...'
    at Function.Module._resolveFilename (node:internal/modules/cjs/loader:933:15)
    at Function.Module._load (node:internal/modules/cjs/loader:778:27)
    at Function.executeUserEntryPoint [as runMain] (node:internal/modules/run_main:81:12)
    at node:internal/main/run_main_module:17:47 {
  code: 'MODULE_NOT_FOUND',
  requireStack: []
}

[!] Invalid `Podfile` file: 859: unexpected token at ''.

 #  from /Users/XXXXX/Documents/test/ios/Podfile:7
 #  -------------------------------------------
 #  target 'test' do
 >    config = use_native_modules!
 #  
 #  -------------------------------------------

I have verified that my LANG variable is the same on both terminals: en_US.UTF-8

Ruby version: ruby 3.1.1p18 (2022-02-18 revision 53f5fc4236) [arm64-darwin21]

Cocoapods version: 1.11.3

I have tried installing ruby through brew, rbenv, rvm. The problem remains on all three. I am on MacOS Monterey 12.1 on M1.

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