The rise in commodity prices and the effect of stagflation

The world’s economy is spending to build up stagflationary forces, which helps recover the energy prices, increase inflation, and also helpful in healing the Pandemic breaks on the economy.

The global economy faces the crucial threat of stagflation from the current Russia and Ukraine war, which causes trading disruption and increment in oil pricing.

The oil price will increase to $100 per gallon, which is higher in the last three years. Natural gas is also very costly, at a higher level in a decade. The prices of food products will also increase after the pandemic recession. Lots of problems occur, like massive failures of crops in Brazil.

Household companies are hit to the top because of their rising costs, while inflation is faster than the economists. And then the most extraordinary situation occurs when the policymakers are standing in the position where they have to choose whether to boost prices or most nominal growth, which possess higher risk.

There is already a comparison with economic stagnation and oil inflation that dominated in 1970. At that time, lots of bankers will discourage this as a hyperbola. And the result will be higher prices to feed the demand of the world, Which is getting the economy into a vast cycle.

Drastic recovery

Many economies are all returning to their pre-pandemic level immediately. But some economies are taking their time. Expert economists calculate that commodity prices will increase 20%, and their worth is $550 Billion. And there is a bad condition for most of the commodity consumers.

Most of the economies are drastically changed and reach the next level. Russia, Australia, and Saudi Arabia are the game changers in that condition, while Europe, India, and China are the losers in that inflation condition of the world.

There is the most remarkable recovery in oil import, which means the growth of Britain will be significant. And also, there are massive cuts in the production area of energy in China. Which is expected to lower growth this year, and that declaration is confirmed by the expert economists of Morgan Stanley and Goldman Sachs group.

In the United Kingdom, consumers’ confidence has fallen due to the big break of the corona pandemic. And the rules for the government should be stricter than other countries. There is the most considerable shortage of drivers for delivering the fuel to the petrol station.

The UK and Europe both suffered from that situation at that time. The prices of natural gas and electricity also increase because of drastic demand from the inventories, Which is heavy on consumer sentiment. The latest scenario of commodity prices has taken over the markets and surprised the economists just like central banks.

Final words

The advanced economies recovered moderately from the corona pandemic recession. However, the gross domestic products will return to their pre-pandemic inventory in 2022. According to a study this month, a decisive outcome was predicted in 2020. many organizations are insisting the fade in, fade out in the commodity prices.

The impression of Russia and Ukraine war on the economy of India will be felt by higher commodity prices.

Christine Lagarde, who is the president of the European Central Bank, said that there is a drastic challenge for policymakers is that
” We cannot overreact to inventory supply shocks that have no manure in the medium term.”

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