Russia’s war of aggression has pushed up inflation, Krugman said. REUTERS/Brendan McDermid
According to leading economist Paul Krugman, food inflation in the US was mainly caused by Russia.
Russia’s invasion of Ukraine has disrupted agriculture and pushed up fertilizer and natural gas prices.
“We would definitely see some relief if Vladimir Putin called off this invasion,” Krugman added.
This is a machine translation of an article by our US colleagues at Insider. It was automatically translated and checked by a real editor. We welcome feedback at the end of the article.
According to leading economist Paul Krugman, soaring food prices in the US are largely due to Russia’s invasion of Ukraine and not anything that happened in the US.
The Nobel laureate pointed to the rise in food prices over the past year, with the food price index the Food and Agriculture Organization increased to 123.9 in July is. That’s 12 percent less than last year, but still significantly more than in the summer of 2020, when the index fell below 100.
Observers have argued that the rising Groceriespraise the result of uncontrolled spending under the government Biden and the “greed inflation‘, a phenomenon in which companies raise prices in order to make even greater profits in times of widespread inflation.
The main cause of the “food inflationHowever, outside of the U.S. — largely due to Russia, according to Krugman. That’s because Russia’s invasion of Ukraine has disrupted agricultural production in Ukraine, Russia and Kazakhstan, affecting the available food supply and driving up prices. This has affected the supply of food and pushed up prices. According to experts, this has reduced the risk of full blown food crisis increased, sparking protests and outbreaks around the world as food becomes scarce.
Russia has even taken action to attack key food export hubs in Ukraine, and dropped the wheat prices skyrocketed in July after it dropped out of the Black Sea export deal and bombed the port of Odessa.
Russia’s invasion of Ukraine has also pushed up fertilizer prices as the country is one of the is the world’s largest exporter of fertilizers. Russian natural gas, used to make fertilizers in Europe, also rose in price as Putin cut key pipelines to the continent.
These factors have helped drive up food prices, which has been exacerbated by disruptions to agriculture resulting from climate change and extreme weather events, Krugman said. However, Russia’s influence is still at the top of the list of contributors to food inflation.
“Russia may be the only government that can have a major impact on global food inflation. We would definitely see some relief if Vladimir Putin called off this invasion (which he won’t),” he added.
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Overall, however, inflation appears to be cooling as high interest rates in the US slow the economy. Overall prices rose just 3 percent year-on-year in June, well below the 9.1 percent recorded in June 2022.
Markets are now awaiting the July CPI report, which is due out on Thursday and should provide more insight into how inflation is responding to tighter financial conditions. According to the Cleveland Fed Total prices are expected to increase by 3.42 percent year-on-year which is slightly above the June inflation figure.
Read the original article in English here.