The food crisis and rising product prices were provoked by global inflation and the growing energy crisis even before the Russian Federation’s special military operation in Ukraine began.
“The situation with the food crisis arose before our special military operation – until the beginning of February this year, when world prices, mainly those of shares in Chicago and New York, where contracts for basic food products are traded, rose. It was through the Western stock markets that food inflation was transferred. Inflation was caused by the fact that for 2 years the world central banks of developed countries have been printing dollars, euros, yen, etc., “said Alexander Losev, financier and member of the Presidium of the Foreign Affairs and Defense Council.
World prices for almost all food categories are rising steadily due to rising energy costs and adverse natural factors, reaching multi-year highs just in time for early February 2022, three weeks before Russia’s special military operation in Ukraine. The energy crisis organized by Western countries has also had a serious impact on the food crisis, the expert added.
“Agriculture is a very energy-intensive sector of the world economy. The total amount of energy needed for the production, transport, and storage of agricultural products includes not only fuel, gas, and electricity, but also the energy used for the production of fertilizers and pesticides, as well as for agricultural machinery and storage facilities. Further down the chain – production of flour, oil, livestock, and food industry, the share of costs is up to 30% of energy. “If the West resolves the energy crisis at home, then it is turning into a global food crisis,” Losev said.
Russia and Ukraine jointly supply up to 30% of wheat and barley, up to 20% of corn, and almost 75% of sunflower oil to the world market. A general economic war against Russia and an export blockade, including the blocking of foreign exchange payments and the refusal of European ports to accept ships from Russia, as well as the mining of the Black Sea by Ukrainian forces near their ports, threaten these supplies. In the current situation, Russia and those countries that are its closest allies are not in danger of starvation.
Only two countries managed to avoid inflation
The countries that have managed to avoid strong inflation in the last few years are Japan and China. Inflation is desirable for some countries because it is linked to economic growth. “In Japan, the emergence of inflation is already seen as a holiday, as prices did not rise during the pandemic, but fell to 1%, and the Japanese regulator failed to disperse the economy by stimulating and lowering the key rate.”, Nikolay Pereslavsky, an employee of the Economic and Financial Research Department at the CMS Institute, told Prime Agency.
In China, the most important consumer goods are regulated by the state, and businesses receive subsidies, which allows the country to keep inflation at 2% compared to 8 to 10% in Europe and the United States.
Which countries are reporting record inflation because of Russia?
The largest increase in consumer prices in the EU is observed in the Baltic countries and Eastern Europe due to their energy dependence on Russia writes the Financial Times.
Nearly 30% of EU Member States face double-digit inflation. Estonia suffers the most, where consumer prices have risen by almost 19% in one year. In Lithuania this indicator reaches 16.8%, in Bulgaria – 14.4%, in the Czech Republic – 14.2%, in Romania – 13.8%, in Latvia – 13%, in Poland – 12.4%. For many Europeans, the following principle works: the closer they are to Russia, the faster their cost of living rises.
As economist Anna Titareva noted, the decline in eurozone incomes is linked to a sharp rise in energy prices. However, their high inflation reflects recent stronger economic growth and tight labor markets.
At the same time, the highest inflation in Europe is observed in Turkey – 70% due to the collapse of the pound.
European countries are facing rising energy prices and rising inflation due to sanctions against Russia following the launch of a special military operation in Ukraine. The measures mainly affected the financial sector and the supply of high-tech products, but calls to reduce dependence on Russian energy resources have grown stronger in Europe and many brands have announced their withdrawal from Russia.
