Severe sanctions on Russia aim to isolate the country and create a deep recession there, but the economic fallout will also be felt by people around the world.
The sharp rise in the prices of things from oil and metals to wheat is expected to push up the cost of many everyday items from food to petrol and heating.
Some ways are:
1) It might cost way more to heat one’s home
The Russia-Ukraine conflict is expected to drive these even higher and has already caused the oil price to jump to its highest level in more than seven years, while future gas prices doubled in just one day earlier this week.
Russia is the second-biggest exporter of crude oil, and the world’s largest natural gas exporter, which is vital to heating homes, powering planes and filling cars with fuel.
2) Food could cost more
UK food producers don’t import many items from Russia or Ukraine, but prices here may still rise because of an increase in associated costs, such as tinned cans and packaging and transport.
The UK, by contrast, typically produces more than 90% of the wheat consumed in the country. But farmers here might find themselves paying more for fertiliser, which is one of Russia’s biggest exports.
3 Mortgage/rent may rise
Inflation, which measures how fast the cost of living rises over time, hit 7.5% in January in the US – the highest level seen there since February 1982 – and rose by 5.5% in the UK.
But one economist has warned it could rise close to 10% in major Western economies if the cost of energy and food is pushed up by dwindling supplies cause by the Russian-Ukraine conflict.
4 Pension might drop
Russian stocks crashed by as much as 45% in the wake of the Ukraine invasion with trading subsequently suspended, with banks and oil companies among the worst affected.
If widespread falls in share prices are sustained then it’s likely to be bad news for pension savers because the value of their savings pot is influenced by the performance of investments.
5 DIY and cars could cost more
As a leading commodities exporter, Russia is one of the world’s largest suppliers of metals used in everything from aluminium cans, to copper wires, to car components, such as nickel, which is used in lithium-iron batteries, and palladium, which is used in catalytic converters.
If Vladimir Putin decided to cut off supplies of these metals in retaliation to sanctions, existing supply problems could worsen, with car firms having to find alternative sources.
Source – BBC
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