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Aug. 6, 2022, 4:24 p.m. EDT

Inflation is spiking around the globe, not just in the United States

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By Christopher Decker

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Many businesses either fired or furloughed large numbers of workers in 2020. When governments began to relax restrictions related to the pandemic, many employers found that significant numbers of their  former workers were unwilling to return to work .

Whether those workers had  chosen to retire early , seek new  jobs offering a better work-life balance  or  become disabled , the results were the same: labor shortages that required higher wages to  recruit replacements and retain other employees .

Again, all of these dynamics are  occurring globallynot just in the U.S.

War in Ukraine compounded these woes

Russia’s war on Ukraine, which began officially on  Feb. 24, 2022 , has also exacerbated inflation by interfering with the  global supply of fuels  and  grains .

The conflict’s effects are reverberating around the globe and  fueling inflation .

Russia is the world’s  second-largest exporter of crude oil /zigman2/quotes/209723049/delayed CL00 +0.79% . Sanctions against Russian imports, combined with  Russia halting oil shipments to European countries  in retaliation, has led to disruptions in the global oil market.

As Europe buys more oil from the Middle East, demand for oil from that region increases, prompting price increases.  Crude prices /zigman2/quotes/209723049/delayed CL00 +0.79%  jumped from $101 per barrel in late February 2022, to $123 a month later. Prices stayed high for several months but by late July were around $100 a barrel again.

Food prices have increased substantially  in the U.S. and elsewhere, partly due to this conflict. Ukraine possesses some of the most fertile soil in the world and is the  third-largest exporter of corn /zigman2/quotes/209710348/delayed C00 +0.31% .

Russia’s destruction of Ukrainian crops and its  blockade of Ukrainian exports  have led to  significant price increases worldwide  for  agricultural commodities .

How will the world respond?

Support for globalization and international trade has waned  in recent years. Given supply-chain disruptions and the war in Ukraine fueling inflation, this trend will likely continue.

However, as an economist, I believe the benefits of free and open trade still outweigh current challenges.

In my view, there isn’t anything fundamentally wrong with the globalization that  cannot be fixed . But, like quelling inflation and alleviating supply-chain bottlenecks, it will take time.

This commentary was originally published by The Conversation—Inflation is spiking around the world—not just in the United States

Christopher Decker is professor of economics at University of Nebraska Omaha.

US : U.S.: Nymex
$ 72.58
+0.57 +0.79%
Volume: 354,956
Dec. 8, 2022 12:17p
US : U.S.: Nymex
$ 72.58
+0.57 +0.79%
Volume: 354,956
Dec. 8, 2022 12:17p
643.25 ¢
+2.00 +0.31%
Volume: 59,560
Dec. 8, 2022 11:17a

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