Russia’s war against Ukraine will lead to “the biggest price shock since the 1970s”

World Bank experts say in a new report that the war in Ukraine will lead to the largest increase in prices for all goods since the 1970s, from natural gas to wheat and cotton.

In Europe, natural gas is becoming more expensive – almost twice as much. In 2023 and 2024, prices will fall slightly, but will remain 15% higher than last year.

According to the World Bank, from April 2020 to March 2022, the largest increase in energy prices was observed in 23 months since the rise in oil prices in 1973, when prices rose amid tensions in the Middle East.

Oil prices are projected to remain high in 2024, and this year the average price of Brent base oil will be $ 100 / barrel, which will lead to large-scale inflation. The World Bank’s forecast for other goods, especially food, whose value will rise sharply, is also pessimistic. The FAO food price index has already reached its highest level in 60 years. Wheat prices are expected to rise by 42.7% to record highs, barley by 33.3%, soybean by 20%, oil by 29.8% and chicken by 41.8% due to reduction of exports from Ukraine and Russia. Fertilizers, metals and minerals are also becoming more expensive.

“In the medium term, the disruption of supplies caused by the war may be offset by other countries,” the report said. “At the same time, a 69% increase in fertilizer prices could lead to a reduction in farmers’ use, which will reduce crop yields.”

“Commodity prices are expected to peak in 2022, but will remain higher than previously forecast. The prospects of commodity markets will depend on the duration of the war in Ukraine and the disruptions in supply chains caused by it, ”the report concludes.

Tags: war, Ukraine, prices, food