Invasion of Ukraine triggers prices in Latin America and the Caribbean

According to the IMF, this situation would force central banks to increase the fight against inflation, a scourge that erodes the purchasing power of wages and affects demand.

The global economy is suffering from the shock wave of the Russian invasion of Ukraine, which is raising food and energy prices in Latin America and the Caribbean, which increases inflation, the International Monetary Fund warned on Tuesday (03.15.2022). (IMF) in a blog.

“Food and energy prices are the main route of collateral effects, which will be substantial in some cases,” say IMF economists, who warn that more pronounced increases “may generate a greater risk of unrest in some regions” , noted the report.

“High commodity prices are likely to accelerate inflation considerably” in the region, which already averages an annual rate of 8% in five major economies: Brazil, Mexico, Chile, Colombia and Peru.

Meanwhile, Argentina, according to data from this Tuesday, registers an annualized inflation of more than 52%, it was indicated.

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Russia and Ukraine are major producers of raw materials, and disruptions to trade in these products and fears of grain shortages, for example, have caused world prices to soar, especially for energy sources such as oil and natural gas.

The cost of some foods has also risen as the price of wheat soared. Ukraine and Russia represent 30% of world exports of this cereal, although the effects of the increases are uneven in each country.

Rising oil prices hurt importers in Central America and the Caribbean, while exporters of crude oil, copper, iron ore, corn, wheat and metals can charge more and thus mitigate the impact of the conflict on growth, IMF economists estimate.

Financial conditions remain relatively easy but could worsen if the war escalates, leading to tighter domestic monetary policy that would weigh on economic growth, experts say.

gs (afp, efe)

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