HUNTSVILLE, Ala. (WHNT) – The United States has seen price increases on many products, from food to gas. Supply chain issues resulting from early pandemic shutdowns, compounded by the recent Russian invasion of Ukraine, have led to widespread inflation. As the conflict continues and the global supply of commodities like wheat is disrupted, Americans could see additional price increases at home.
“One of the other side effects of the conflict is actually that Russia and Ukraine are two of the biggest wheat producers in the world,” said Huntsville University associate professor of economics Dr Wafa. Hakim Orman.
The International Food Policy Research Institute reports that Russia and Ukraine produce a combined total of over 34% of global wheat exports.
Earlier this month, Ukraine banned the export of certain products deemed necessary to provide food for Ukrainians, including wheat, oats and live cattle. The Russian government has also stopped the export of wheat to several neighboring countries.
“The United States produces a lot of its own wheat, but limiting the global supply of wheat from these two countries will further drive up the global price of wheat,” Orman said.
The US Department of Labor reports that the cost of consumer grain products has increased 7.8% over the past year.
The United States is a major wheat producer. According to the US Department of Labor, US farmers produced about 1.64 billion bushels of wheat last year, and the majority of wheat imports into the US come from Canada. While the U.S. is unlikely to face a wheat shortage, Orman said if world prices rise, that price increase will eventually be reflected in grocery stores.
“Unless this is resolved quickly enough, you can expect food prices to rise as well,” Orman said.
Over the past year, prices have risen 7.9% according to the US Department of Labor. This week, the Federal Reserve announced an interest rate hike to help combat widespread price increases.
“The Fed decided to be a little more aggressive,” Orman said. “They were saying initially, in December, that they were going to raise interest rates three or four times this year, and now they’ve said no, we’re going to do it six times.”
Orman said she believes the Federal Reserve’s decision to raise interest rates was made in part because of Russia’s invasion of Ukraine.
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