Food and energy prices no longer predicted to reduce because of the conflict in Ukraine

Text Mark Taylor
Photo Andrei Chertkov

Analysts previously predicted that the cost of energy would begin to decrease in the second half of 2022, with the lowering of energy prices and transition out of the pandemic slowly reducing food prices. However, Russia’s invasion of Ukraine and the uncertainty this has caused will mean prices will likely continue to rise.

“It is certain that the predictions made at the beginning of the year are no longer valid, and inflation will remain very high throughout the year. Today, it is extremely unclear to what extent Russia’s gas and oil supplies to Europe will continue. Oil prices have reached record highs,” explained Mihkel Nestor, economic analyst at SEB.

Krista Aab, an economic analyst at LHV, explains a different aspect of the conflict, “military action threatens to destroy this year’s crop in Ukrainian fields and supplies of various industrial metals in Europe. “ 

Ukraine produces around 15 per cent of the world’s grain, with Russia producing a similar amount. The conflict has already caused the price of grain to rise on global markets by 50 per cent.

According to Nestor, it is likely that the Estonian government will bring in measures to try and reduce the effects of rising prices for consumers. However, it is possible that price rises could still exceed wage increases. 

Source ERR 

To learn more about this and similar topics
Energy Prices Estonia Food Prices Krista Aab Mihkel Nestor Russia Invasion of Ukraine Ukraine Conflict Ukraine Invasion