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War in Ukraine is driving up wheat prices worldwide

Ukraine war contributes to rising wheat prices
MoneyWatch: War in Ukraine contributes to rising wheat prices around the world 03:14

The war in Ukraine, combined with levels of inflation not seen since the 1980s is driving up the price of wheat worldwide. 

The two-month-old conflict in Ukraine is exacerbating already food costs that were already soaring, in part due to COVID-related supply-chain struggles that have contributed to high levels of inflation. 

"We've seen most of the inflation, I think, that we're going to see right now. We're running about 10% over levels of last year which is quite high," Joseph Glouber, a senior research fellow at the International Food Policy Research Institute, told CBS News. "Some of that is supply-chain stuff from COVID, but we have seen record-high commodities prices including wheat."

High inflation is expected to persist and remain well above levels of 2 to 3% that have been common over the past two decades, according to Glouber. 

Soaring wheat costs are particularly disruptive for countries like Egypt and Lebanon, which depend heavily on wheat from Ukraine. 

"These are countries that consume about twice as much wheat as we do per capita. It's just a lot of wheat," Glouber said. 

Indeed, 35% of the calories consumed in Egypt come from wheat, about 70% of which is imported from Russia and Ukraine. 

"That's a fairly recent development over the last 20 years, where Ukraine and Russia have become much, much larger players in the world wheat market," Glouber said. 

As a result, countries that depend heavily on wheat are looking for new, more affordable sources of the crop. Some will find substitutes while others will strike out — and require humanitarian aid.

"I look at a country like Yemen ... 100% of its wheat comes from imports; it's very, very poor. The price increase alone represents about 4% of the GDP of Yemen. There is just no way they can absorb those sorts of costs. They'll need humanitarian aid," Glouber said. 

"I think the biggest thing countries can do is not do anything stupid, what I mean by that is put on export restrictions and other things that can further exacerbate price hikes in the world," he added. 

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