The economic consequences of Russia’s invasion of Ukraine a week ago have resonated around the world, leaving many families concerned about how the crisis may affect their finances. The quick answer is that prices may rise, particularly for gasoline (and indeed already have). Economists predict that prices for food and consumer products such as cellphones will rise. Inflation would be driven mostly by shortages and rising costs of raw goods such as oil, wheat, and metals such as palladium, all of which Russia produces in enormous quantities. It would also happen at a time when consumer prices are rising at their quickest rate in 40 years.
According to experts, consumers are most likely to feel the war’s inflationary impact in the immediate term through the price of fuel. Gas prices have climbed since Russia’s saber-rattling began, even before the invasion on February 24. The major component of gasoline is crude oil. According to the Energy Information Administration, it accounts for 56 percent of what Americans pay at the pump. As a result, increased oil prices frequently result in higher gas costs. The war between Ukraine and Russia boosted US oil prices to their highest level since 2008 on Thursday, topping $100 per barrel. The worldwide price soared to levels not seen since 2012.
The crisis between Russia and Ukraine has the potential to affect food prices, however analysts believe the consequences would be felt most strongly elsewhere. Russia exports the most wheat in the world. Ukraine and Russia account for about a third of all worldwide wheat shipments. Wheat prices soared to their highest level in 14 years. If producers pass on greater costs to customers, this could affect pricing for bread, pasta, cereal, baked products, and other wheat-based meals. Other food products exported by Russia and Ukraine include barley, sunflower seed oil, and corn. However, because the United States is a net exporter of agricultural commodities, particularly wheat, corn, and soybeans, any impact will be diluted.
Apart from food and crude oil, the price rise in all commodities have been observed and has affected all lives globally.