June 7, 2022 - 1:36pm

In George Orwell’s classic 1984, the three great super-states Oceania, Eurasia and Eastasia are continuously at war with one another. This war, Orwell tells us, “is no longer the desperate, annihilating struggle that it was”; rather it is a perpetual war and is used to justify the poor living standards experienced at home to a confused population.

Yesterday, the President of the European Council Charles Michel blamed Russia’s invasion of Ukraine for causing a global food crisis at a UN security council meeting. Russia’s UN ambassador stormed out. Certainly, the Russian invasion of Ukraine has put pressure on global food prices, but Michel made a stronger accusation than that. “Russia is solely responsible for this food crisis,” Michel said. US Secretary of State, Anthony Blinken, went further still. He stated that “Russia is pilfering Ukraine’s grain exports to sell for its own profit”.

This is obviously untrue. To see this, we only need look at the consumer price inflation index broken down by component. As of April, food prices in the UK are rising at around 6.8% year-on-year. This is a high rate of food price inflation — the average rate since 2010 has been around 1.5%.

But as the chart below shows, this upward trend began in November-December 2021, long before the Russian invasion of Ukraine. In February, the rate of food price inflation was already 5% — and since the invasion took place at the end of that month, it could not have been the cause.

I am not denying that the situation in Ukraine will not make this crisis worse. But it is just one of many factors. In fact, the sanctions that we are imposing on Russia are likely having more of an impact than the war itself. Ukraine is an important wheat producer, but not as important as Russia. Ukraine makes up around 7% of world wheat imports, but Russia makes up 18%. Yet even this is dwarfed by the fact that Russia is a key player in the global market for fertiliser, meaning that the sanctions wreak havoc with local crop production.

If we take a few steps back, we start to see what is really to blame for our inflationary woes: our leaders, who believe that they can clumsily intervene in our economies at will. This tendency started with the lockdowns, where they treated the economy like a desk fan that could be turned off an on. And we saw it again following the Ukraine invasion, where they drew up arbitrary sanctions packages while completely ignoring their potential effects.

If the war in Ukraine had not started, our leaders may have had to evaluate the consequences of their actions during the lockdowns. But the war gave them cover to further meddle with our economies — and now they have someone to blame for the problems they themselves were creating. The public does not seem to buy it — most leaders in major countries have terrible opinion poll ratings — but the leadership class appears to operate in a different universe from the rest of us.

This is not a sustainable situation, economically or politically. Something will eventually have to give. The characters in Orwell’s novel bought into the Party narrative and accepted that the shortages and poverty they experienced was a result of the actions of the enemy abroad. But the people in our societies know that our leaders are to blame — the Party narrative will crumble very soon.

Philip Pilkington is a macroeconomist and investment professional, and the author of The Reformation in Economics