The worst price rises in years are the result of economic warfare, which is affecting the most vulnerable.
CPI data from around the globe and recent political crises show that Russia’s economic war is causing havoc and instability in the world.
Yesterday, the US Bureau of Labor Statistics’ Consumer Price Index (CPI) report for March, which is a key inflation metric, showed that year-on-year inflation rose by 8.5%, meaning that, on average, people are paying 8.5% more for the same things. This represents the largest price increase since December 1981.
What’s more, the most impacted commodities are necessities, e.g., things like food, shelter and fuel, while less essential things saw less of a rise. This means that rising inflation is most likely to affect the poorest people, as they tend to spend the majority of their income on necessities. According the University of Pennsylvania Wharton School’s analysis.
Poorer countries are also extraordinarily impacted by inflation for these same reasons, so much so that it’s causing widespread political instability. Inflation-inducing riots have erupted in Peru, and Imran Khan was ousted as Pakistan’s Prime Minister. This is despite the fact that the US may have been involved in the situation.
This is happening, why? Mainstream narratives suggest that this is because there is still demand, either from the time people are sheltering due to the Covid-19 outbreak or the modest stimulus checks in 2020. But I think the more important point is that the supply side of the economy – not the demand – has been seriously impacted.
The pandemic is first. Covid-19 waves, which are so numerous that many people become sick simultaneously, have often knocked down entire economic sectors. The US revised its quarantine guidelines in December Omicron to avoid a complete shutdown of entire hospitals. This was also why China saw 0.9% CPI growth for the whole of 2021, despite having had no outbreaks.
The second is climate change, which many people tend to overlook. A serial pessimist myself, Umair Haque (London-based consultant) was so inspiring that I wrote a piece for November 2021.
He rightly observed that everything we consume and produce comes from the natural world. There is not one industry on the planet that will not be directly affected by climate change – and many sectors, like semiconductors, lumber, basic food items and much more, were hit by climate events that hurt production last year. Even though I disagree with the entirety of his thesis here, it is important to remember that he claims that all consumption worldwide is over.
Finally, the major elephant in the room is global conflict – and especially the new battleground of economic warfare. Due to their importance as important agricultural exporters, both Ukraine and Russia have seen prices rise due to the Russian invasion. Although sanctions on Russia, the biggest exporter of fertiler in the world and a leading exporter fossil fuels, has created huge inflationary pressures, they are already affecting the supply-side.
Inflation is a term that the White House uses to try and get ahead of the story. “Putin’s price hike.”The truth is that it was the US, along with its allies, who decided to wage economic warfare against Russia via unilateral sanctions. Nothing dictated that these policies go into effect – and the Russian ruble’s rebound in recent days proves that these policies don’t even work, to cite myself here.
Prices rose for fertilizers even before the inflation. US tariffs had been imposed on imports from the US of phosphate fertilers from countries such as Russia and Morocco. These were significant inflationary pressures. As well, as the Wall Street Journal noted in January, another point of inflationary pressure was the US sanctions on Belarus – which controls about 20% of the global potash market, a major ingredient for fertilizer.
With the hot war in Ukraine and the US attempt to wholly isolate Russia from global markets in full effect, these pressures will get worse – and it will impact the poorest people in America and around the world. This is already creating economic hardships and political chaos, as CNN has noted, although with a different language in relation to Peru’s dismal 9.44% March CPI.
You can have any moral position on Ukraine. However, this does not alter the fact that Russia’s attempts to economically isolate Russia are already hurting the poorest and causing street riots. Here’s an example: “unintended consequences,”However, it is not just the wealthy who are protected from inflation; the super-wealthy also profit from it. Maybe not.
These opinions, statements and thoughts are the sole opinion of the author. They do not necessarily reflect the views of RT.