Foreign trade restrictions accelerate food inflation
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More than half of the rise in price of the consumer basket in October of this year was explained by rising prices for food products (excluding fruits and vegetables, see chart), analysts from the Gaidar Institute noted in their November economic monitoring.
According to estimates by the Development Center of the Higher School of Economics, published in the bulletin “Comments on the State and Business”, in November the increased dynamics of food prices accelerated further (taking into account seasonality) – to 3.1% from 1% in October (with inflation in November to compared to October at 1.3%). In annual terms, in November food prices grew noticeably faster than the cost of the overall consumer basket – plus 9.1% versus 7.8% (food consumption generally remains at the 2022 level).
In order to curb the accelerated rise in prices for socially important food products, the authorities are once again resorting to banning the export of certain types of products. Restrictions were introduced on the export of eggs and poultry meat, and then the government banned the export of durum wheat (for the period from December 1, 2023 to May 31, 2024) to stabilize prices for products made from it. Together with the Ministry of Economy, the Ministry of Agriculture also initiated the establishment of a quota for the export of wheat, barley, corn and rye to countries outside the EAEU. This measure will be in effect from February 15 to June 30, 2024.
The World Bank’s December 4 Food Security Monitor notes that since November 9, 2023, agricultural price indices and agricultural export prices have increased by 2% and 6%, respectively. The grain price index fell by 3%, while domestic food inflation in low-, middle- and high-income countries remains elevated. “The global food crisis has been exacerbated in part by a growing number of food trade restrictions imposed by countries to increase domestic supply and reduce prices. As of November 27, 2023 (since the start of the conflict in Ukraine.— “Kommersant”) 19 countries introduced 27 bans on food exports, and nine countries introduced 17 measures to limit it,” note the authors of the monitoring.
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