Russia-Ukraine conflict could lead to higher food and fuel prices for U.S.
Russia's invasion of Ukraine comes at a vulnerable time for economies around the world, and could increase to further increases in food and fuel prices for the U.S.
With inflation already at a worrisome level, consumers are paying more for basic goods across the board, and the global supply chain is still recovering from pandemic disruptions.
The invasion, which has upended geopolitics and threatens a humanitarian crisis in Ukraine, put stocks on a roller coaster and sent the price of wheat, oil and other commodities higher Thursday.
Russia and Ukraine are major producers of a range of commodities — oil, natural gas, grains, metals — whose prices rise during big global events such as war. Those higher prices eventually ripple to grocery stores and the gas pump, and this conflict is no different, the LA Times reports.
“It is the American middle and working classes that will bear the burden of adjustment caused by another European war,” Joseph Brusuelas, chief economist at the accounting firm RSM, was quoted as saying by the publication.
With the produce industry already being challenged by high fuel prices driving up transportation costs, further increases could prove to be even more complicated for the sector.
The U.S. imports relatively little from Russia directly, but what happens there and in Europe has wide knock-on effects.
The national average price of a gallon of regular unleaded gas has reached $3.59, up 33 cents so far this year, according to GasBuddy data.
Russia is the world’s second-biggest natural gas producer, behind the U.S., and it is among the top three in oil production, along with the U.S. and Saudi Arabia, supplying about 10% of what’s consumed worldwide.
Economists worry that higher food and energy prices could push inflation into double digits. U.S. inflation last month hit its highest level in a couple of generations, and higher consumer prices now could raise expectations of high prices for months and years to come.
The consumer inflation rate in January surged to 7.5% compared with a year earlier, well above the 5.7% average wage gain for most workers in the same 12-month period.
In the U.K., there are concerns that the conflict could lead to food rising even faster than over recent months, with Russia being a large exporter of fertiliser.
"[They export] wheat, fertilisers, so that's going to impact the broad food chain and I think it's highly likely now in the UK we'll see inflation reach 8% which is a number we haven't seen in 30 years," she added.