The prices of sunflower oil and bread are soaring globally due to Russia’s invasion of Ukraine, says Wandile Sihlobo, an economist at the Agricultural Business Chamber of South Africa.

The reasons for the big price increases are the shortages of Brent crude oil, sunflower oil and grains.

According to Sihlobo, the price of oil has steadily increased over the past two years because of the Covid-19 pandemic and some instability in the Middle East.

WATCH: Economist Wandile Sihlobo shares his concerns about food price increases with Izak du Plessis.

It became more acute when economies opened up and the oil demand increased as people started to drive more, says Sihlobo.

“Russia’s invasion of Ukraine added even more problems as Russia is a major player in the supply of oil. Therefore, fuel prices are at record levels and the end is not yet in sight.”

On April 6, South Africans can expect further increases of between R1.50 and R2 per litre of petrol and diesel.

Sihlobo says South Africa transports numerous products by road, which means that fuel price increases will impact the cost of food and other goods. “We will keep on seeing its effect in the coming months,” says Sihlobo.

The war in Ukraine has also impacted the region’s output and export of sunflower seed and oil, as well as grain.

The news is not good

The Willowton Group, South Africa’s largest sunflower seed crusher and manufacturer of products such as edible oils, margarine and spreads, held a webinar recently to unpack the direct impact the war will have on markets.

In the webinar ‘What’s Putin a strain on oil prices’, vegetable oil expert Thomas Mielke noted that the war is affecting the availability and thus the price of edible oils.

According to the Observatory of Economic Complexity, Ukraine is the biggest exporter of sunflower and safflower oil, accounting for 46% of global exports. Russia produces 23% of the world’s demand.

According to Mielke, in the absence of these two countries’ produce, there is not enough oil to supply the world. This will influence prices.

“However, a bigger than expected sunflower harvest in South Africa alleviated the fears of a shortage, although it will not prevent increasing prices,” says Sihlobo.

He says South Africa has managed to import just under 800 000 tons of wheat, but millers have put plans in place to supply more wheat. “There will thus be no shortage, but price increases are inevitable,” says Sihlobo.