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Rising food, gas prices hit families as global inflation surges – Portland, Oregon

Portland, Oregon 2021-11-29 08:55:24 –

Budapest, Hungary (AP) — From US electronics stores to the Hungarian food market to Polish gas stations, rising consumer prices, supported by high energy costs and supply chain disruptions, are driving households and businesses around the world. Bringing a pinch.

Rising inflation has led to higher prices for food, gas and other products, encouraging many to choose between digging into their pockets or tightening their belts. In developing countries, it is especially disastrous.

Gabor Pardi, a shopper at the open-air food market in Budapest, the capital of Hungary, said after recently buying a bag of fresh vegetables, “I noticed that consumption is declining.” “I’m trying to buy the cheapest and most economical one, even if it doesn’t look good.”

Approximately two years after the COVID-19 pandemic, the economic impact of the crisis is still felt after countries have emerged from the debilitating blockade and consumer demand has recovered. Today, another surge in infectious diseases and a new variant of the coronavirus, Omicron, are leading countries to tighten borders and impose other restrictions, threatening the recovery of the global economy.

The response has been particularly devastating to Central and Eastern Europe. There are some of the highest inflation rates in the European Union of 27 countries, and people struggle to buy food and fill fuel tanks.

Ildiko Vardos Serfozo, a butcher in the food market in Budapest, said the business has fallen as customers move towards a multinational grocery chain where they can offer discounts by buying in bulk wholesale.

“Because buyers are price-sensitive, they often leave us behind, even for high-quality products. It’s about money,” she said. “I realized that inflation isn’t good for us … I’m happy that kids don’t want to continue this family business. I don’t see much in the future.”

In nearby Poland, 71-year-old pensioner Barbara Grotowska said he was hit hardest by a garbage collection fee close to 88 zloty ($ 21) outside a discount supermarket in the capital of Warsaw. She also lamented that the cooking oil she used had risen by a third of its price to 10 zloty ($ 2.40).

“That’s the real difference,” she said.

The recent rise in inflation has surprised business leaders and economists around the world.

In the spring of 2020, the coronavirus destroyed the world economy. The government ordered a blockade, businesses closed or shortened operations, and families stayed home. The company canceled the order and postponed the investment in case of the worst.

To stop the economic catastrophe, wealthy nations, especially the United States, have introduced trillions of dollars in official development, a scale of economic mobilization that has not been seen since World War II. Central banks have also lowered interest rates to revive economic activity.

However, these efforts to revitalize the economy have had unintended consequences. Supplier responded to the surge in demand as consumers felt more daring to spend the money they received through government support and low interest rate borrowing, and vaccine deployments encouraged people to return to restaurants, bars and shops. I tested my ability to maintain pace.

Ports and cargo yards were suddenly clogged with shipments, and prices began to rise as global supply chains were seized, especially as factories and ports in Asia were closed due to the new outbreak of COVID-19. ..

The price increase was dramatic. Inflation in the United States surged to 6.2% in October, the highest since 1990. The International Monetary Fund predicts that global consumer prices will rise 4.3% this year, the largest rise since 2011.

This is most noticeable in developing countries in Central and Eastern Europe, with the highest annual rates in Lithuania (8.2%), Estonia (6.8%), and Hungary (6.6%). In Poland, one of Europe’s fastest growing economies, inflation was 6.4% in October, the highest in 20 years.

Some shoppers in the vegetable department of Warsaw are concerned about rising prices for staple foods such as bread and cooking oil, and said they expect the situation to worsen in the New Year when energy prices rise.

Pyotr Morak, a 44-year-old vegetable seller, said the prices for potatoes, apples and carrots he sold didn’t have to be raised yet, but cherry tomatoes imported from Spain and Italy for euros have risen significantly. rice field. It is more expensive because the Polish zloty is weakened.

“You will almost feel this in the New Year when electricity goes up,” Morak said. “We will really feel it when we have to spend more on the house than on joy.”

The weakening of currencies across Central and Eastern Europe against the US dollar and euro has pushed up import and fuel prices, exacerbating supply backups and pinches from other factors.

The Hungarian currency, the forint, has lost about 16% of its value against the dollar in the last six months and fell to a historic low against the euro last week. Zsolt Balassi, Portfolio Manager for Hold Asset Management in Budapest, said this is part of Hungary’s central bank’s strategy to keep the country competitive and attract foreign companies seeking cheap labor. ..

However, import prices soared, and global oil prices set in US dollars pushed fuel costs to record levels.

“This will constantly raise the oil price of our currency, as the Hungarian forint, and in fact all local currencies, are more or less constantly weakening,” Barasi said.

This month, the Hungarian government announced a cap of 480 forint ($ 1.50) at gas stations in response to record fuel prices that peaked at 506 forint ($ 1.59) for gasoline and 512 forint ($ 1.61) for diesel. Did.

Hungary’s next election, which the right-wing ruling party has faced the most serious challenges since its election in 2010, has given some relief, but was probably a factor, Barashi said.

“This is obviously a political decision that has a huge financial disadvantage, but it will probably make the household happy,” he said.

The political nature of some economic decisions is not limited to Hungary.

Poland’s central bank, also facing a currency depreciation, has been accused by critics of allowing inflation to be too long and too high in order to boost economic growth and strengthen support for the ruling party. increase.

Banks surprised the market with the timing and scale of two base interest rate hikes in October and November to ease prices, while the Hungarian central bank raised interest rates little by little six times this year.

Still, if the central bank moves too quickly and aggressively to control inflation, it could hinder economic recovery, said Carmen Reinhardt, chief economist at the World Bank.

She is mainly worried about rising food prices that hurt the poor in developing countries. There, an imbalanced proportion of households is directed towards keeping food on the table.

“Food prices are a barometer of social unrest,” Reinhardt said, saying that the Arab spring riots that began in 2010 were partly due to rising food prices.

Anna Andrzejczak, 41, who works for the Polish Environmental Foundation, was still a child when communism ended in Poland in 1989, and has only vague memories of hyperinflation and other economic “turmoil” associated with the transition to Poland. Do not have. Market economy.

However, she feels that prices are rising “every time she fills a tank,” and last year fuel costs rose by about 35%.

“This inflation is now a big shock, as it has been stable for the past few years,” said Andrzejczak. “There is no price increase like at that time, but I think this will be a big stress.”

Rising food, gas prices hit families as global inflation surges Source link Rising food, gas prices hit families as global inflation surges

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