Ukraine’s inflation rate stands at 16.1 percent, but has fluctuated by almost 25 percentage points in the last year. Inflation spiked because of a weak wheat harvest, global food competition, elevated energy costs and rising wages produced by rapid economic growth.
The government responded to the increases in food prices by restricting grain exports [PDF]. But the current food crisis in Ukraine — a country known as the breadbasket of Europe and the black-earth belt — presents challenges and opportunities. The cost of staple items like bread, eggs and vegetables increased by 20 to 70 percent.
High global prices and demand for grain result in reduced local supply, and therefore higher prices. Private investors are also lining up to buy and develop Ukrainian land, despite a legislative moratorium that prevents the sale of land.
Dave Marash reports from Kiev on Ukraine’s potential to open up land to private investors, feed the world and support its domestic economy.