Global food prices rose 13% after Russia's invasion of Ukraine

Yahoo Finance Live’s Julie Hyman reports on the uptick in global food prices amid the Russia-Ukraine war as well as a Russian missile strike on a train evacuating eastern Ukraine, leaving 30 dead and 100+ injured.

Video Transcript

JULIE HYMAN: So let's get straight to the three things that you need to know this morning. The effects of the Russian invasion of Ukraine still sending shockwaves through the global economy, and the latest evidence of that is coming to us as a data point from the United Nations, which said that its index of global food costs was up by 13% in the month of March.

And obviously, this is more of a problem for poorer countries than for the developed world, but nonetheless, obviously, we have talked a lot about the crimp that that is putting here on US consumers as well. Since mid-2020, that global price chart is up by 75%. So, obviously, rebounding and then some from the slump that we saw following the onset of the coronavirus pandemic. So we've been watching that.

And we've talked a lot about the various components, of course, of food prices that have gone up. Wheat prices a prime example here and squarely in focus as the fighting in Ukraine continues because that country is a big producer of wheat to Europe. So you can see wheat futures continue to move higher this morning, just as they have been. By the way, that surge that we saw overall in food prices last month was the seventh straight quarterly gain as well, if you look at it overall for the quarter.

What does this mean for the global economy? What does it mean also for the Russian economy? By the way, the Russian central bank cutting its interest rates. And Brian Sozzi, it really puts things in perspective here in the US when we look at our rising interest rates, the fact that the Russian central bank cut its rate to 17% from 20%. And it seems as though, again, as we talked about yesterday, the fact that it is still able to sell its oil and gas around the globe is a factor perhaps showing its comfort here that it can cut these rates.

BRIAN SOZZI: Well, Julie, I can confidently say we're not at 17% interest rates here. So if there's anything to be happy about is, in fact, that. But of course, any discussion on inflation in the next breath, you have to look at what this Federal Reserve is doing. So many interesting notes out this week on Wall Street. Lots of folks now, I think, starting to at least factor in the likelihood of a recession later on next year or early 2024.

Interesting note by Dennis DeBusschere over at 22 Research this morning, saying that more investors are losing confidence in the immaculate tightening argument. In other words, this view that the Fed could pull off a soft landing, stocks can continue to go up, we can go on our Merry way and have a great holiday season. But he's starting to hear folks perhaps question that argument.

He does make a good point that it is worth thinking deeper on over the weekend. He says, quote, "If investors believe the Fed will raise rates until inflation slows, financial conditions should tighten as investors price assets for a slowdown in growth." Something to keep in mind over the weekend as you're reading up on the markets.

JULIE HYMAN: Yeah, definitely, and we're going to talk to Seth Carpenter of Morgan Stanley more about the Fed's reaction to inflation. That's coming up at the top of the 10:00 AM hour. Before we move on from Russia, the ripple effect of what we're seeing in inflation, just wanted to mention one grim piece of news and one developing story that we are watching as well, coming out of Ukraine.

In Eastern Ukraine, in the city there, there was a train full of people that was trying to evacuate. It was hit by a Russian missile strike. President Zelensky has alleged that Russia knew that this evacuation was happening. And reportedly, 30 people have been killed and perhaps hundreds injured as a result of this. People were waiting to board that train in order to evacuate that city.

Now that the fighting has moved, really, away from Northern Ukraine and from the Kyiv environs and more towards Eastern Ukraine, we are seeing people there trying to evacuate into other parts of the country. We're going to keep monitoring that. But of course, that now triggering another round of international condemnation, so we continue to track those developments.