According to the regulator, rising fuel and transport prices in the world market, climate change, lower than expected yields, rising prices for basic foodstuffs, pandemic-related supply disruptions, labor shortages in labor markets and growing demand led to an increase in world prices reaching their 10-year high.
At the same time, the gradual easing of strict quarantine measures against the backdrop of vaccinations, economic recovery, and a gradual increase in activity in the tourism and services sectors began to put increased pressure on prices from the demand side. The broad impact of price increases is particularly noticeable in developing countries, which is explained by a larger share of food in the consumer basket of the population.
In particular, according to the Food and Agriculture Organization of the United Nations (FAO), in 2021, food prices increased by 23.1%. Over the past year, vegetable oil has risen in price by 36%, sugar – by 33.6%, grain products – by 20.8%, meat and dairy products – by 17.4%. In turn, in terms of integration with the world market, these changes have a certain impact on the price situation in the domestic market. Due to a significant increase in imports from Belarus in the last quarter, the relatively stable formation of meat prices compared to previous periods had a positive impact on the slowdown in consumer prices.
At the same time, the increase in the general level of inflation was mainly due to an increase in prices for wheat flour, pasta, poultry meat, milk, eggs, sugar, fruits, including apples, grapes, vegetables and soft drinks.
Simultaneously, prices for rice, lemons, bananas and carrots declined. It should be noted that in the 4th quarter one of the main reasons for the growth in food prices was the increase in prices for fruits and vegetables compared to previous periods. In particular, in October-December, the growth in food prices amounted to 6%, while the growth in food prices, excluding fruits and vegetables, was 2.3 percentage points lower.
Drought in key trading partner countries in 2021 led to lower-than-expected wheat harvests, as well as restrictions on grain exports from these countries, which accelerated the rise in wheat prices. Against the background of climate change, drought and cold in Brazil, a major exporter, led to a reduction in sugar production, which contributed to the increase in world sugar prices.
The global economic recovery is expected to stimulate consumption. At the same time, the price of sugar and vegetable oil is formed on the basis of world oil prices. If energy prices continue to rise, demand for ethanol could lead to a decrease in sugar production in Brazil, and biodiesel production from soybeans could lead to higher prices for other vegetable oils (soybean, palm, sunflower, rapeseed).
Reducing the supply of barley, wheat and other forage products in the face of reduced food supplies, as well as Kazakhstan’s ban on the export of livestock and small cattle, and potatoes can have a significant impact on meat and potato prices in the domestic market. The increase in vegetable prices can be explained mainly by the fact that they are exported in large quantities to foreign markets, while domestic supply is limited.
In the future, prices for these products will be formed depending on consumer demand in the domestic market and the supply of entrepreneurs, as well as the price situation in neighboring countries.
