- Cecilia Barría and the Visual Journalism team*
- BBC News World
6 hours
image source, BBC Mundo
If prices had been rising as a result of the effects caused by the covid-19 pandemic, the war in Ukraine ended up adding fuel to the fire.
This is how the cost of many of the essential products at a global level skyrocketed after the start of the armed conflict at the end of February, generating an energy and food crisis.
When more than six months have passed since the war began and although central banks have raised interest rates to try to control the inflationary spiral, the cost of living has reached record levels not seen for decades.
This gigantic increase in prices is calculated through a basic basket of goods and services that each country produces according to household consumption.
That basket includes hundreds of products and services that range from spending on health, rent, or education, to the price of fuel and food.
image source, BBC Mundo
In the 6 largest economies from Latin Americayear-on-year inflation (July 2022 compared to July 2021) reached 71% in Argentina, 13.1% in Chile, 10.2% in Colombia, 10% in Brazil, 8.1% in Mexico and 5.6% in Peru.
With the idea of simplifying the comparison between countries, at BBC Mundo we chose eight basic mass consumption products to take the pulse of the impact of the rise in some prices on people’s daily lives.
1-Oil
image source, BBC Mundo
(The measurement of Brazil refers to soybean oil, the most used in the kitchens of that country).
Edible oil has been one of the products with the highest price increase in international markets.
In addition to the decrease in supply due to droughts and increased consumption after the pandemic, the war in Ukraine caused the price of oil to set historical records.
As Ukraine and Russia are the world’s largest exporters of sunflower oil, its scarcity generated surprising price increases that earned it the nickname of “liquid gold”.
Another element was added to this scenario: a high demand for vegetable oils to be used in the biofuel industry, further reducing the supply of the product.
2-Flour
image source, BBC Mundo
(In Mexico and Colombia the price of corn flour is included. In the other countries it is wheat flour).
This graph shows the increase in the price of flour in the last year.
Although both wheat flour and corn flour are used in kitchens, we have selected those that are used more extensively in each country.
In the case of Brazil, Chile, Argentina and Peru we record the value of wheat flour and for Mexico and Colombia we include the increase in the cost of corn flour.
The rise in wheat flour dragged with it the bread pricewhile the rise in corn flour increased the value of products such as tortillas and arepas.
3-Leche
image source, BBC Mundo
(The INEI in Peru uses the cost of whole evaporated milk as an indicator of the price of milk).
With the increase in production costs, dairy products have suffered sharp price increases.
In some countries, climatic conditions have made raising cows more expensive, and in the midst of the wave of inflation sweeping the world, the entire production chain has been affected: from the fertilizers needed to feed the animals, to the cost of fuel to transport the milk
Many producers have preferred to get rid of a part of the herd, selling the least productive cows to slaughterhouses.
The rise in the price of milk in countries like Brazil (66% in the last year), has generated a whole market for products that simulate to be dairybut are actually made with whey, starch and chemical additives, cheaper ingredients and low in nutrient density.
4-Beef
image source, BBC Mundo
(In Brazil it is picaña meat, in Peru it is beef steak and in Argentina it is common minced meat. For others it is beef in general.)
Faced with the increase in the price of beef, many families have looked for other sources of protein or, in the case of the most vulnerable, they have been left without them.
The variation in prices depends, among other factors, on whether the country is a producer or importer of beef, on how the different parts of the production chain impact the final cost, or if there is any type of price control.
In countries like Argentina, Colombia and Chile, consumers have seen year-over-year increases of 61.7%, 27.1% and 26.3% respectively in July.
5-Gasoline
image source, BBC Mundo
(In those countries that report several prices, the most common octane rating was used).
In the months that followed the war, the price of oil and gasoline soared to historically high levels amid international uncertainty caused by the conflict.
Although more recently prices have slowed their upward run, the cost to families remains high nonetheless.
To mitigate the effects of the increase in the cost of gasoline and diesel, governments intervene through the following mechanisms: direct subsidies, stabilization funds, tax reduction or price management through state companies.
Chile, Colombia and Peru have a price stabilization fund that seeks to smooth out fluctuations.
Brazil influences prices through tax reductions, Argentina through indirect taxes and price freezes, and Mexico through direct subsidies.
6-Sugar
image source, BBC Mundo
As a product traded on international markets, the price of sugar slowed its increase in the last five months, although remains high for many families in the region.
Just look at what has happened in the last year, with an increase of 136% in Argentina and 43.6% in Peru.
On the other hand, it is worth bearing in mind that one thing is the price of sugar bought by wholesale companies and quite another is the price paid by consumers in each country.
Brazil is the world’s leading producer of sugarcane, accounting for more than 30% of the global market. In Latin America, it is followed by Mexico and Colombia.
7-Pollo
image source, BBC Mundo
The increase in the cost of feeding chickens It has been one of the determining factors that explain the rise in its price.
Poultry feed (especially corn and soybeans) accounts for nearly 70% of the poultry production chain.
Grains are some of the products whose value suffered one of the highest increases due to the war in Ukraine, a country that was known as “the granary of Europe”.
8-Eggs
image source, BBC Mundo
Severe outbreaks of bird flu in the United States and France have reduced the world’s supply of eggs, while the war in Ukraine has disrupted exports to Europe and the Middle East.
The increase in its value has also been influenced by the scarcity of fertilizers and the high price of fuel.
And to that is added the situation of the local markets. In Peru, for example, the increase in the cost of the product would have been driven by a drop in the national production of hard corn, the main food for chickens.
The rise in the price of eggs is hitting hardest the most vulnerable families who depend on them as a substitute for meat and the only low-cost source of protein.
(*Ggraphs prepared by Cecilia Tombesi).
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