The World Bank forecasts further price increases

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It is predicted that due to the lack of products from Russia and Ukraine, wheat prices will rise by 42.7 percent, barley by 33.3 percent, soybeans by 20, oil by 29.8 percent and chicken by 41.8 percent.

Inflation is ravaging the world, and even our market, and judging by the predictions of eminent World Bank economists, we are not doing well. There are no indications that the growth of retail prices will be stopped, and moreover, the growth of inflation is expected.

The World Bank said that the war in Ukraine would cause the biggest price shock since 1970. The analysis predicts that the disturbance due to the war will lead to an increase in the prices of almost all products – from gas to grain and cotton.

Due to the lack of products from Russia and Ukraine, wheat is forecast to rise by 42.7 percent, barley by 33.3 percent, soybeans by 20, oil by 29.8 percent and chicken by 41.8 percent. It is added that the lack of wheat on the world market is the most difficult to compensate, especially since the bad weather conditions in North America and China will further aggravate the situation this year.

The analysis indicates that energy prices will increase by more than 50 percent, which will greatly increase the bills of both households and businessmen. The biggest price increase is predicted for gas consumers in Europe, who will pay twice as much for this energy this year, and a drop in prices is expected next year and in 2024, but even then gas will be at least 15 percent more expensive than in 2021.

Goran Radosavljevic, a professor at the Faculty of Economics, Finance and Administration (FEFA), says that inflation will “split” us by the end of the year.

“At this moment, I think that the key thing is what will happen with agriculture, that is, with spring sowing. According to the analysis, the costs are 45% higher than last year. If they are that much bigger, then the final product will be 100% more expensive. So far, we have had a 30, 40 percent increase in producer prices. We all hope that in our country, because we produce food, the price increase will not be enormous. The problem is that wheat, corn, soy are commodities and we cannot cut ourselves off from the world. We can, of course, ban exports. But in the long run, that will destroy domestic producers who essentially live from exports. Since these are stock exchange goods, there will be a global rise in prices. That is inevitable.

He adds that Russia is the second or third largest producer of wheat in the world and the largest exporter. Ukraine is somewhat smaller, and both countries are large producers of agricultural products. There are no agricultural works in Ukraine now.

He believes the World Bank’s estimates, although they are probably a bit exaggerated. We have seen this in the Kovid crisis. When it is bad, they think that it is better to say that it is even worse, and that it should be better. Or that it won’t be so good, and it will be. That is their policy. And whether this year’s inflation will be the highest since the seventies of the last century, Radosavljevic says that it is difficult to predict, but it will certainly be high. As a reminder, the rise in prices from the 1970s is due to the drastic increase in oil prices due to tensions in the Middle East.

“As far as Serbia is concerned, we can try to pretend to be an isolated island for a while, but that will not give results, because inflation will last.” I think that the return of inflation in Serbia in 2023 to the target corridor of three, plus, minus 1.5 percent is almost science fiction. Especially in the part of the prices of agricultural products, because it cannot be influenced in the short term. If sowing was expensive, it will only lead to a rise in prices in the fall and will spill over into next year “, notes Radosavljević.

The World Bank warns that food prices will be significantly increased, and states the data of the United Nations that the food price index is the highest since it started to be conducted 60 years ago. Before this war, Ukraine and Russia participated in the global export of wheat with 28.9 percent, and in the export of sunflower oil with as much as 60 percent, Politika reports.