In addition to global energy prices, the Russian invasion of Ukraine has had a significant impact on food prices. Global fertilizer prices rose to record levels in 2022. According to the USDA, fertilizer prices account for nearly one-fifth of U.S. farm cash costs, with an even greater share for corn and wheat producers. The Russian invasion of Ukraine triggered import-export restrictions that compounded supply problems. Russia is the top exporter of agricultural fertilizer with an estimated 15% of the global market. The war has also had a major impact on the price of wheat. Russia and Ukraine combined for 30% of global wheat exports prior to the war. Wheat prices spiked 50% in early 2022, as wheat exports were disrupted by the war. Wheat prices significantly declined in summer aided by a United Nations brokered deal with Ukraine to establish a safe corridor for grain trade. Unfortunately, Russia backed out of that deal in late October. Significant uncertainty over wheat exports, and pricing, remains. Inflation by Product Category The table below shows price changes for selected products in October 2022 and over the past 12 months. Major product categories include Food, Energy, and all items less Food and Energy (which is also called “core inflation”). Subcategories include Food at Home, and four major products which had substantial price increases in the past 12 months under the “All Items less Food and Energy” category, including New Vehicles, Shelter, Medical Care Services, and Transportation.
Inflation by Product Category
Product Category
Percent Price Change October 2022
Percent Price Change 12-months Ended October 2022
All Items
0.4 0.6 0.4 1.8 0.3 0.4 0.8
7.7
Food
10.9 12.6 17.6
Food at Home
Energy
All Items less Food and Energy
6.3 8.4 6.9 5.4
New Vehicles
Shelter
Medical Care Services
-0.6
Transportation
0.8
15.2
For the 12-months ended October 2022 overall inflation rose 7.7%, with core inflation (all items less food and energy) increasing 6.3%. Consistently over the past year, food and energy have been the leading categories of inflation. Food at Home increased 12.6%; one bright spot was that the October increase of 0.4% was the lowest monthly increase since December 2021. Energy prices rose 17.6% for the past 12 months. The October price increase of 1.8% followed three consecutive monthly price declines. New vehicle prices, Shelter, and Medical Care Services all had significant increases over the past year at 8.4%, 6.9%, and 5.4%, respectively. Only Medical Care Services saw a price decline in October. Transportation prices, reflecting increased energy costs, rose 15.2% over the past 12 months and 0.8% in October.
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Center for Business and Economic Insight
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