Russia's invasion of Ukraine is disrupting global trade, from oil to wheat and soybeans, and if the situation spirals further, consumers could feel the pain in their wallets, including those living in areas as far off as the Philippines, an economist said.
While Ukraine is roughly 9,000 kilometers away from the Philippines, the impact was immediately felt in local pump prices, even before Russian President Vladimir Putin ordered military offensives.
That's the cost for countries that are reliant on imports like the Philippines, which does not produce enough fuel for its needs. Brent crude, the benchmark for world prices, soared past $100 per barrel, a level last seen during the 2011 Arab Spring.
It's a "commodities contagion", said Security Bank economist Dan Roces. "All of these will likely transmit to local prices with the cost being transferred towards local consumers."
Prices of wheat and soybean will also likely go higher, Roces said. This means the cost of importing wheat for bread and soybean for animal feed could go up.
"The main concern right now is where inflation will be headed," he told CNN Philippines.
Raw materials like wheat and soybean accounted for 41% of the country's total imports in Dec. 2021, based on the most recent trade data from the Philippine Statistics Authority.
Possible inflationary pressures also come at a time when the Philippines is carefully reopening its economy from one of the world's longest lockdowns. Metro Manila could be placed under the lowest set of restrictions, Alert Level 1, by March 1 at the earliest.
"It's a very difficult situation that we are finding ourselves in. Our econpomy is just starting to recover... It's the hope that household consumption will be the main driver of the recovery moving forward," he said.
This means consumer spending on anything from groceries to clothes to gadgets, which the government is counting on to help lift the economy from the pandemic, is under threat if inflation quickens.
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Russia's Invasion of Ukraine: What's Happening Around the World
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