Inflation: Food prices rose at fastest rate in 14 years in March due to war in Ukraine

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Inflation: Food prices rose at fastest rate in 14 years in March due to war in Ukraine Listen to this article

Food prices hit a new record in March, rising for the third time in a row by the war in Ukraine. The index, prepared monthly by the Food and Agriculture Organization (FAO) of the United Nations, which aggregates growth from around the world, closed the month with a 33.6% increase compared to March 2021, its highest in 14 years. The highest rate, and is at 159. points, the highest level in the historical series, which began in 1990. Armed conflict is wreaking havoc on supply chains that originate in the region, particularly in products such as grain and sunflower oil, and has disrupted the functioning of parts of the world. trade flows.

Record rises in prices of the most basic food items are a sign that the spiral of inflation that threatens the recovery of the world economy will continue to worsen. Between February and March, the index had risen by 13%, according to FAO, According to the UN agency, it is “a giant leap”. Last month’s increase was the seventh consecutive year. There hasn’t been such an uninterrupted growth since 2008.

Both Ukraine and Russia are major exporters of cereals and sunflower oil. From that region, known as the granary of Europe, 30% of the total wheat consumed in the world comes. Although Russia continues to sell wheat, sanctions complicate payments and logistics, while Ukrainian ports have been closed since the start of the invasion on 24 February and it is also unclear whether the country’s farmers will be able to secure future crops. Supply conflicts are also causing extraordinary increases in energy, and raising production costs, which indirectly contribute to the rise in food prices.

FAO (Europe Press)

The FAO index shows that vegetable oils, cereals and meat have been the main contributors to this historic increase: they increased by an average of 17.1% compared to February, the highest level since 1990. “The growth is largely driven by conflict-related disruptions in exports from Ukraine and, to a lesser extent, from the Russian Federation,” the agency states. Notably, world wheat prices rose 19.7% in March, compared with a new record for prices of maize (19.1%), barley (27.1%) and sorghum (17.3%), with coarse cereals up 20.4%. Became expensive.

The rise in food prices had begun months before the war began, partly due to a rapid recovery after two years of harsh epidemics, and also due to a reduction in the production of some crops due to inclement weather. This growth has been accelerating since February. Between mid-2020 and today, global prices have risen by 75%, higher than the levels recorded in 2008 and 2011, which ended in major food crises.

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Growth is generalized to a basket of basic foods, such as milk (seven consecutive months). According to the FAO, “Dairy product prices continued to rise, especially as milk production in Western Europe and Oceania was insufficient to meet global demand due to increasing shortages in world markets.” As well as meat, whose index is at historic highs due to short supply.

War and supply problems are affecting countries like Spain, not only because of the general increase in prices, but also because of the shortage of certain products. In the Spanish case, the one that has the greatest impact is the sunflower oil, on which it is highly dependent. Manufacturers who use it, especially for processed and preserved products, are exploring alternatives to other vegetable oils. But these are also becoming more expensive, such as palm, soybean and rapeseed.

Price increases keep Western economies under control, but their effects are particularly devastating in poorer countries, where the shopping cart absorbs almost the entire budget of households and any increase in prices directly affects their most basic food, Like it affects bread. Recently, the World Food Program warned that rising prices in the Middle East and North Africa, heavily dependent on imports, were pushing populations to the limit. According to the FAO, about 50 countries rely heavily on Ukraine and Russia to cover more than 30% of their wheat imports.

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