Not just petrol affected by the war

Oliver Hartwich writes:

Another concern is food prices. Ukraine and Russia are major exporters of maize and wheat. It is unclear whether there will be a large harvest this year, and no major shipping lines service Black Sea ports.

The price of wheat has skyrocketed as a result. In January, it was about US$7.50. Now it is US$13. It is a catastrophe in many poorer countries where households spend most of their budgets on food. It could trigger famines.

An increase in fertiliser prices – another major export from this region – will exacerbate agricultural crises. The fertiliser price in Britain increased by almost 50% in the past week alone.

Metals and rare earths are also a concern. Nickel, for example: From US$18,400 per tonne in January to US$80,000 today. Best of luck to any industry needing such resources.

The war has business implications everywhere. Airlines must make huge detours to avoid restricted airspace. Car manufacturers are closing factories because some of their parts suppliers are based in Ukraine. McDonald’s lost 9 percent of its global revenue from leaving the Russian market.

This is before we get to the question of how central banks will respond. Will they fight the wave of massive inflation? Or will they support their struggling economies?

I didn’t realise the impact on wheat or nickel. Inflation may not peak for some time yet.