BAKU, Azerbaijan, May 12. Global prices for agricultural commodities have increased sharply, since the conflict between Russia and Ukraine arose, Trend reports via Capital Economics, UK-based research and consulting company.
The report noted that food prices have been increasing even pre-conflict, as high energy prices boosted production costs. The hostilities between Russia and Ukraine added further to the prices increase, while the GCSI agricultural commodity price index rose nearly 30 percent year-to-date.
“The price of fertilizer surged due to the combination of higher gas prices and sanctions on Russia and Belarus (both major producers of key raw materials). The price of food oils also rose sharply due to the expected loss of sunflower oil supply from Ukraine,” Capital Economics added.
In response to this, some countries chose to save their resources, as, for example, Indonesia, that recently banned its vegetable oil exports, which can further restrain global food supply.
“The sharp rise in agricultural commodity prices as a result of the war in Ukraine has boosted food inflation to a multi-decade high, adding 0.6 percentage points to average inflation in advanced economies compared to our [pre-conflict] forecast,” Capital Economics said.
Thus, according to the forecast from Capital Economics, the consumer spending will slow down in 2022, due to the high food inflation. Although, it seems that food prices have already reached its peak, and will gradually fall over the year.
However, “high energy and fertilizer prices will keep agricultural prices above their 10-year average,” the report said.
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