Inflation Nearing A Dangerous High: Ukraine war threatens to blow US food prices sky-high

Fox Business

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As war continues to ravage Ukraine, Americans, particularly those who live paycheck to paycheck, are beginning to feel the financial squeeze on their food prices from the conflict half a world away.
It began with a rapid rise in gas prices. Now, with Russian oil banned in the United States and energy scarcity heightened globally, experts say shoppers can expect their grocery bills to rise in coming months – especially if Ukraine misses its wheat planting season.

“It comes an absolutely horrible time for American consumers because we’re looking every day at inflation almost reaching 10%,” Dan Varroney, a supply chain expert and founder of Potomac Core, told FOX Business. “Last month’s figures were close to 8%. And that means that consumers, including those that are living paycheck to paycheck, are going to pay more for food.”

Russia and Ukraine produce 25% of the global wheat supply, according to the Observatory for Economic Complexity. While neither of these countries export wheat to the U.S. directly, their absence from the global market is expected to strain supply and push prices higher.

All of this scarcity, from natural gas and crude oil to wheat and seed oil, will impact the cost of doing business for food manufacturers at home.

Varroney, who dove into global supply chain issues during the pandemic in his recent book, said that with the rising cost of inputs, some companies won’t have a choice but to raise the cost of their products for the end user. To him, it all comes down to the rising cost of energy at every step of the supply chain.

“Everything from getting food from the ground, to producing it, to storing it, to delivering, it all involves energy,” Varroney said. “Natural gas is utilized to manufacture those foods. Then when you get past that? And you get into logistics, you’ve got a store, these food products, so there’s gasoline to ship and there’s electricity to store.”

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