Port blockade is curbing food inflation in Ukraine — economist

Problems with the operation of Ukraine’s Black Sea ports and lower agricultural exports are currently restraining domestic food price growth. A significant share of the harvest that would normally be exported remains on the domestic market, increasing supply, according to economist Oleksandr Savchenko.

He said the situation is paradoxical: restrictions on maritime exports are hurting the agricultural sector but at the same time creating a surplus of agricultural products relative to domestic consumption. This is putting downward pressure on prices and partially curbing food inflation.

Fuel prices remain another important factor affecting food production costs. They had previously increased, but global crude oil prices have recently started to decline, which could also ease inflationary pressure.

At the same time, Russian attacks on Ukraine’s logistics and storage infrastructure remain a significant risk. Savchenko believes that if retailers can reduce their dependence on large warehouses, the impact of infrastructure damage on consumer prices could remain limited.

Despite the price-dampening effect of excess agricultural supply, some food categories could become more expensive as early as September. Seasonal vegetables and fruit are expected to be among the first to see price increases.

Tags: Ukraine, food inflation, port blockade