Russia-Ukraine war sends global food prices to record high

Global food prices have soared to their highest level ever driven by the Russia-Ukraine war choking supplies of basic foodstuffs, revealed an official index released yesterday.

World food costs jumped 13 per cent last month, sending the United Nations’s food price index to 159.3 points, a record high.

Ukraine is a linchpin in the global grain market, leading the country to gain the nickname the “breadbasket” of Europe. Russia is one of the world’s top fertilizer producers.

The Kremlin’s decision to send troops into Ukraine has blown trade flows of inputs used to produce food off course, sending prices soaring.

Russia has been shunned by the western business community, resulting in the fertilizer market being thrown into a supply deficit, which is putting upward pressure on prices.

The two countries are major exporters of wheat, corn, barley and sunflower oil, and typically use the Black Sea as the focal point to send supplies around the world.

However, normal operations at the trade hub have been scuppered as a result of the military conflict.

Ukrainian crop yields are forecasted to be much lower this year due to farmers being unable to cultivate land effectively as a result of the war.

The UN’s fresh data underlines concerns that the Russia-Ukraine is set to fuel already rampant inflation that is hitting rich nations hard.

The cost of living in the UK is running at a 30-year high of 6.2 per cent, while across the pond in the US, prices are 7.9 per cent higher than they were a year ago, the steepest increase in four decades.

Fresh UK inflation figures published this coming week are expected to show the cost of living is worsening in the country.

Economists at the Office for Budget Responsibility estimate inflation will average 7.4 per cent across the whole of 2022, resulting in the worst rate of living standards erosion since the mid-1950s.