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Soaring commodity prices have become a major problem in many countries. Countries like Bangladesh, Iran, and much of Africa, are having to contend with shortages of basic foodstuffs. Indonesia, for example, has imposed a ban on the export of soybean oil which will only worsen food security issues around the globe.

Inflation has emerged as a global problem affecting most economies. In an era of globalization and interconnectedness, global inflation is posing a severe threat to our interdependence.

Complex interdependence is the web of economic dependence and relations among states and institutions that created the global economy. Robert Keohane and Joseph Nye first introduced the concept in the 1970s. Today, we live in a world where societies and economies are interconnected beyond hard land borders.

Although this system promised peace, it also brought weaknesses. Butterfly or ripple effects are becoming more robust than ever. One small change in the international market is affecting others directly or indirectly.

Inflation has become a global problem for some time now. The latest data suggests that the inflation rate in the United States is 8.5%, in the UK it is 7%, and 7.8% in the Eurozone. Apart from country-specific rates, the global inflation rate is also growing significantly. The current global inflation rate is 9.2%. As a result of growing inflation, commodity prices have soared worldwide.

By March, the global price of raw materials rose by 16%. The cost of essential raw materials such as iron, steel, and lithium, increased by 243%, 250%, and 98%. Since the Ukraine crisis, oil prices have also skyrocketed to more than $100 per barrel. The prediction for the near future is not very rosy. The World Bank forecasts that energy prices could soar over 50% in the coming days resulting in the largest commodity shock since the 1970s.

However, the situation has worsened as edible oil prices have also soared due to Indonesia’s export ban. Indonesia alone supplies 55% of the world’s total palm oil, while Malaysia is the second-largest supplier with a 30% stake. As Indonesia suddenly imposed a ban on exports, it has created concern over global food prices.

As a result of growing inflation, the purchasing power of ordinary people around the world is decreasing. Longer lines in Dhaka’s TCB selling points are evidence of this. Rising living costs are also impacting savings across the globe. By April, the savings rate in the Eurozone dropped to 13.3%; the rate was 25% in the first quarter of 2020. Moreover, the latest Indian ban on wheat exports will also pose a new challenge to the livelihood of ordinary people. It is worth mentioning that India is the second-largest wheat exporter.

The main reason behind these crises is the supply chain disruption caused by the ongoing China-U.S. trade war, the pandemic, and the war in Ukraine. While Ukraine and the pandemic contributed to the problem, the root of the problem goes back to the China-U.S. trade war. The trade war disrupted the easy flow of goods worldwide, creating a spike in the price of necessary commodities. Economic stimulus packages and costly pandemic governance have further bolstered the challenges for governments worldwide.

Russia’s unprovoked invasion of Ukraine has ‘fanned’ the flames of global inflation. Both Ukraine and Russia are the largest suppliers of many essential commodities. The war and sanctions have disrupted the production and supply of these commodities. Both countries supply 12% of the world’s total calories. They are also major exporters of sunflower oil, wheat, and maize. Russia is also a major energy supplier. Sanctions have cut the flow of Russian oil and gas to the global market.

Economic liberalism came with the promise of a better life, dignity, and rights. Economic liberalism also promised affordability, prosperity, and peace. But after 30 years, it seems this interconnectedness is heavily reliant on superpowers behaving responsibly. The war in Ukraine is illustrating that one bad actor, in this case, Vladimir Putin, can disrupt the world economy.

Solving global inflation will require time. Several forecasts suggest that the situation is likely to worsen with a commodity shock brewing. The only way to solve it is through cooperation between states, businesses, and related actors. Western superpowers must acknowledge their responsibilities and avoid reckless decisions that affect others. In the age of interdependence, conflicts have wide-ranging ramifications, so diplomacy should take precedence over brute force.

Doreen Chowdhury is a Doctoral Researcher at University of Groningen. Her areas of interest are Comparative Politics, Globalization, South Asian Studies, and Migration Studies. Her works have appeared in The Geopolitics, Aequitas Review, Eurasia Review, and The Financial Express.