What is the reason the Ukraine crisis could trigger worldwide price increases?

What is the reason the Ukraine crisis could trigger worldwide price increases?

Russian troops have begun a military attack on Ukraine with bombs exploding near major cities throughout Ukraine.

Western nations have introduced sanctions that are designed to weaken the Russian military and economy.

The war as well as the economic aftermath could have a significant impact on the people of the globe.

1. The cost of energy, fuel, and airline tickets could increase

The war has brought the price of oil to the highest point in over seven years. Future prices for gasoline soared by 60% in one day.

Russia is the second-largest producer of crude oil. It is also the world's biggest natural gas exporter. Natural gas is crucial to heating homes as well as power planes and filling vehicles with gasoline.

The UK receives only 6percent from crude oil, and 5percent for its natural gas in Russia as compared to the EU getting nearly 50% of the gas it consumes from Russia.

There is a risk that there is a possibility that President Vladimir Putin may "weaponize" its natural resources by cutting down the amount of gas available to Europe as a reaction to sanctions. If a country that relies on Russian supplies is receiving less gas, it will need to buy it back, which could impact the gas supplies for other nations.

This is the reason British bills and energy prices remain affected in a similar manner as European ones.

1. Food prices affected

The ripples of that Russian attack on Ukraine could also impact grocery stores across the globe.

Russia and Ukraine were once called "the breadbaskets of Europe" export around one-quarter of the world's wheat, and half of its sunflower products including seeds and oils. Ukraine also exports large quantities of corn to other countries all over the world.

The analysts have warned of war's potential to affect the production of grain and may even double the global price of wheat.

This can be a major issue for consumers in countries such as Egypt, Turkey, and many countries in North Africa in particular, that rely on corn and wheat from the region.

More than 40 percent of Ukraine's grain and exports to corn went to the Middle East or Africa last year. And disruptions to supply could hinder their availability in these regions.

The UK in contrast generally produces more than 90 percent of the wheat consumed in the country.

However, Russia is also among the biggest exporters in the world of fertilizers. The cost of fertilizers has already raised since they ran out of them in the past year, which means farmers might need to pay more to purchase them, and also produce their harvests.

1. The investment market could be hit

Russian stocks plummeted by up to 45 percent after the news came out of the escalation in Ukraine including banks along with oil and gas companies being among those most affected.

This also caused massive declines in stock markets all over the world. In Europe, Britain's FTSE 100 index fell more than 3 percent, while the German Dax index was close to five percent lower.

As the conflict intensifies market prices are likely to be more volatile.

The first reaction of many people in response to "the market" is that they're not directly affected by it, since they don't invest funds in shares and stocks.

However, there are many people who have pensions, whether privately or through employees who have their savings put into stocks.

The amount they can save in their savings accounts is determined on the basis of the investment's performance.

The majority of pension savers let professionals pick where to invest their money to grow it. A wide range of falls in the price of shares like those that occur on Thursday is likely to be negative for pension savers.

To protect their investment portfolios certain investors or savers may consider moving their assets or money to the traditional "safe havens" such as gold.

However, pension savings, just like other investments, are generally an investment for the long term. Experts recommend not to be concerned about the short-term fluctuations upwards or downwards.

1. Cost of living increases

The households of the US, as well as the UK, are already feeling the pinch due to the rising price of living and wages are struggling to keep up.

Inflation, which is a measure of how quickly your cost to live increases over time, reached 7.5 percent during January, in the US The highest rate observed for the last time since February 1982. The rise was largely driven by the cost of food and energy.

If the supply of food, energy, and other commodities such as metals are stretched due to the Ukraine-Russia conflict and the price of these commodities could go upwards even more.

The Centre for Economics and Business Research think tank said that the rate of inflation in large Western economies could be at or near 10%.

It could also encourage central banks, such as that of the US Federal Reserve or the Bank of England to increase the interest rate, meaning borrowing money becomes more expensive.

The concept is that when borrowing becomes more costly and people have less money. This means that they'll buy less and prices will stop growing as fast.

In the UK around 2.2 million homeowners with mortgages tied to the Base rate of the Bank of England will see their repayments increase, for instance, putting additional pressure on the budgets of households.

1. Cars may be more costly

Russia is among the biggest producers of metals that are used in automobile manufacturing, like palladium or nickel.

Nickel, for instance, is utilized in lithium-iron batteries, as well as palladium in catalytic converters.

The automotive industry is struggling with a chip shortage and supply chain problems due to the outbreak. In the UK there is a chance that one in five almost-new cars is now sold for more than brand new equivalents as their prices are increasing According to the Auto Trader website.

If Russia decides to stop the supply of these metals as a reaction to sanctions, these supply issues could become more severe, by forcing car manufacturers to look for alternative sources, and the prices are expected to increase in the process.

Countries like South Africa and Zimbabwe also produce significant quantities of palladium. However, the demand has been growing.

Russia is also the home of factories for brands such as Stellantis, Volkswagen, and Toyota. Manufacturing facilities in the region might be struggling to run under sanctions, thereby limiting the production and availability of new vehicles.

Visaoperations is a traveling consultant.