Fuel and food price increases are amongst some of the knock-on effects that South Africans can expect as a result of the current Russia-Ukraine conflict. As the world staggers out of the beating posed by the COVID-19 pandemic, hopes of a strong economic recovery have been further battered.
Also read: Russia invading Ukraine explained in 5 points
Economist and senior analyst at the Centre for Risk Analysis Bheki Mahlobo has highlighted three vulnerable sectors subject to change:
- Fuel
- Food
- Energy
Wheat and maize are two grains said to be subject to major inflation. Additionally, petrol prices will reportedly soar this week Wednesday. The Automobile Association (AA) said that for the first time in history, 95 octane petrol inland will rise above R21 a litre.
Here are the changes:
- Petrol 95: increase of R1.46 per litre;
- Petrol 93: increase of R1.46 per litre;
- Diesel 0.05%: increase of R1.44 per litre;
- Diesel 0.005%: increase of R1.48 per litre;
- Illuminating Paraffin: increase R1.21 per litre.
One of the main reasons for the increases in March relates to the rising crude oil prices as a result of Russia’s invasion of Ukraine, the Department of Mineral Resources and Energy noted.
“The Rand appreciated against the US Dollar during the period under review, on average, when compared to the previous period. The average Rand/US Dollar exchange rate for the period 28 January to 24 February 2022 was 15.2343 compared to 15.5081 during the previous period,” BusinessTech adds.
Also read: Massive increase in fuel prices to hit SA from Wednesday
Due to the Russia-Ukraine conflict, global supply chains have been interrupted and as a result, the price of wheat jumped to its highest levels since 2012, reports Wandile Sihlobo, chief economist at Agricultural Business Chamber of SA (Agbiz) and member of the Presidential Economic Advisory Council (PEAC).
Sihlobo said both countries played a major role in the global agricultural market, with wheat and other grains back at the heart of geopolitics.
As economic growth and tourism Mayco member James Vos says, cities exist in a ‘global village’ and rely on each other for travel and trade. He says that commodities and products from different countries make the world go round, and wars and conflicts harm economies and cost jobs. South Africa is of course, no exception to this.
So, how rooted is South Africa in Russia’s supply? Over R60 billion worth.
“African countries imported agricultural products worth $4 billion (about R61.7 billion) from Russia in 2020. About 90% of this was wheat, and 6% was sunflower oil,” adds Sihlobo.
The dependent African countries include Egypt, which accounted for nearly half of the imports, followed by Sudan, Nigeria, Tanzania, Algeria, Kenya and South Africa.
As for products from Ukraine? Over R44 billion.
“Similarly, Ukraine exported $2.9 billion worth of agricultural products to the African continent in 2020. About 48% of this was wheat, 31% maize, and the rest included sunflower oil, barley, and soya beans.”
The future is fragile and the number of other countries that could be impacted is unpredictable.
“The fear is that intensifying conflict could disrupt trade with significant consequences for global food stability,” says Wandile Sihlobo.
For now, the immediate implications on South Africa is the price of fuel, food and energy.
Also read:
War is stupid… but if you buy the war propaganda you may be even more stupid!
Picture: Twitter