The conflict between Russia and Ukraine could see UK food prices rise and inflation reach as high as 8.2% later this year, according to economists.
The government has said it will monitor and offer support as required if the full-scale invasion of Ukraine by Russia leads to a surge in global food prices, as Ukraine is one of the world’s major exporters of wheat and corn.
Economists including Samuel Tombs, chief UK economist at Pantheon Macroeconomics, have warned that the situation could exacerbate the UK’s cost-of-living crisis, with inflation rising well beyond current predictions of around 7% later this year.
Tombs said that if today’s jumps in oil, gas and electricity products are sustained, it could push inflation to a peak of 8.2% by April. This only fall back to 6.5% by the end of the year, he added.
Inflation hit 5.5% in January and the Bank of England currently believes it will peak at more than 7% in April, with huge increases in domestic energy bills.
Thomas Pugh, an economist at RSM UK added: “Looking beyond the immediate humanitarian impact, the effect on the UK economy will depend on what happens next and how long commodity prices remain elevated for.
“But inflation in the UK will now probably rise beyond the 7.5% peak we had expected in April and will remain higher for longer. The direct effects on inflation will also likely extend to food prices.”
In response to these concerns, Commons leader Mark Spencer said today: “Clearly, the conflict in Ukraine between Russia and Ukraine is going to have an impact not only on global fuel prices, but also on global food prices as well.
“The Ukraine is an enormous supplier of food, of wheat and of bread. I think it’s something that the UK government will monitor and, of course, will assist through its work to try and lessen the burden of the cost of living.”
Global wheat prices had already been rising prior to the invasion and are up nearly 40% this year, reaching costs not seen since 2013.