Russia’s invasion of Ukraine cut the supply of major staples to the Baltic states and the Visegrad Four (V4: Czechia, Hungary, Poland and Slovakia). Local factors, such as import intensity, tight labour markets forcing up wages, low food-industry productivity and depreciating currencies, have exacerbated global trends and intensified cost-of-living crises.
- If food prices remain high, they could fuel social unrest, political instability and appetites for the ‘easy fixes’ of populism.
- If populist politicians take power, they could upset rational economic policies and post-invasion recoveries.
- Shaky institutions, political instability and non-diversified economies are central factors exacerbating the war’s effects on food prices.
- Ukrainian refugees may relieve some labour market tightness (a factor fuelling inflation) but it may take time to absorb enough of them.