What could become costlier in India due to war in Ukraine?
It has been three weeks since Russia and Ukraine are in a war. The graph of lost lives is going up, but with that, the prices are also likely to be high. Russia and Ukraine are big exporters of raw materials for the global economy.
Because of the invasion, Ukraine cannot export anything from the country. On the other hand, as we all know, the US has imposed severe sanctions on Russia, which has impacted their export too. The economy is expecting inflation and a hike in prices of many things like Wheat, corn, grains, iron, steel, metals, etc., in India.
Russia and Ukraine together export approximately 29% wheat to the global wheat market. Ukraine is called the “breadbasket of Europe”. But the dispute between the two countries has already shortened the supply. The reports say Russia is destroying farming fields and machinery in Ukraine, which means the country could take a few years to recover.
Ukraine is one of the greatest exporters when it comes to corn. Countries like Africa and China take tonnes of corn. The routes and air movement has been stopped in Ukraine, which is why there has been a hike in the prices of corn in some countries.
Russia and Ukraine are important producers of some other grains and barley and rye. Afterward, which is exported to China, North Africa, etc. If the war continues, these items can see more hikes in their prices.
Russia is known to be a hub for metals. Rare metals like nickel, platinum, gold, etc. are largely found in the country. Due to the sanctions imposed, Russia is not able to supply these metals to various parts of the World. London has already seen an explosion in the prices of nickel at the London Metal Exchange as they fear a shortage of nickel in their country.
In India, edible oils especially sunflower oil are exported from Russia and Ukraine. As per the reports, India had imported around 13.9 lakh tonnes of sunflower oil from Ukraine and around 2.22 lakh tonnes from Russia which is why the prices of edible oils are expected to get costlier.
Iron & Steel
Both the countries in conflict have large iron mines that contribute to delivering raw material in excessive quantities. The world has already been slow to catch up with the demands of steel after the pandemic which is why the researchers and economists sense a chance of prices rising.
The prices of crude oil have already been on the high side since the year 2014. Though the current price has fallen after a five-day hike because of the trading being hampered, the country can see a hike in the prices of crude oil as well.
Recently, Russia had offered crude oil at a lower price after which Indian Oil Corporation Limited has bought 3 million barrels of crude oil from Russia to secure its energy needs.
If the price of crude oil rises, it will make LPG and natural gas costlier.
As quoted above, the conflict between Ukraine and Russia has impacted the trade of the global market. Countries are not able to get their essential raw materials because of which the prices are rising, there is a shortage of material available, etc.
Apart from the global market, even the countries in dispute face economic and trading problems. By US imposing sanctions on Russia for the invasion, many companies have also stopped assisting the market in Russia like Apple. The world at large is facing difficulties, and it is expected that Government might increase prices for the commodities.