2/The Sting in the Pipeline
The war in Ukraine brought with it an energy crisis like no other. Post-Covid-19 reopening prices had already spiked for anything from oil to coal to natural gas. But when Russian tanks rolled into Ukraine in late February, European natural gas prices jumped nearly 400% in two weeks. By August, they were up 700% from the year before.
Before the war, Russia supplied over 30% of Europe’s gas, most of it through a network of pipelines thousands of kilometers long. The gas flow dried up once Western sanctions were in place. Energy prices soared, blackouts, the threat of a recession and the worrying prospect of going back to dirtier sources of fuel.
Thankfully winters have eased and Europe has found other suppliers, bringing gas prices down to their lowest levels since August 2021 at around 50 MW. But, there is a lag of about 6-9 months between what happens in the wholesale market and what happens. For consumers’ bills, that means a punishing increase of around 350 MWh last August – equivalent to an oil price of over $200 a barrel – hasn’t even begun to bite.
3/ valuable food
Food prices, which were already down in 2021 after COVID-19, bounced again after Russia’s invasion of Ukraine on fears of a reduction and disruption of Black Sea trade.
The United Nations Food Agency’s average price index reached its highest level last year, up 14.3% from the previous year. The index was already up 28% in 2021.
Higher energy and input costs, adverse weather and continued strong global food demand are adding pressure from significant market disruptions. Throughout 2022, four of the five food sub-indexes – cereals, meat, dairy and vegetable oils – reached record highs.
Food price pressures are easing, but this has done little to soften the blow for many developing countries, where food and energy prices make up the bulk of spending. The World Bank has warned that shocks linked to the COVID-19 pandemic and the war in Ukraine mean the world is unlikely to meet the long-term goal of ending extreme poverty by 2030.