The Russia-Ukraine war has taken over the news and rightly so! You must definitely know about the huge conflict even if you have been living under a rock. The Russian President, Vladimir Putin launched a full scale attack on the neighboring country last Thursday. The military has killed hundreds of Ukrainian soldiers while more than 50,000 civilians have been forced to flee their motherland.
The carnage taking place in Kyiv is horrifying. It has been estimated that more than 100,000 citizens living in Kyiv have been internally displaced and taken shelter in the underground subway stations. However, the query about the prices about everyday items remains a distant worry in everyone’s minds.
How Are The Prices Going To Be Affected?
1. Oil Prices:
Germany has decided to halt the final approval of Nord Stream 2- a pipeline transporting natural gas from Russia to Germany. Sanctions have been imposed on Russia which means that Europe will have to source natural gas from elsewhere, which will raise oil prices everywhere.
Due to oil prices surging, the price of food will keep rising. Food prices have already risen on a global scale in 2021 due to climate change and higher energy prices. Both the countries, Russia and Ukraine, account for more than a quarter of the global wheat export while Ukraine is responsible for almost half the exports of sunflower oil.
A country hindered and destroyed by war can easily tumble food production, hence leading to a sharp spike in prices on a global scale.
Regular freight links have been established between China and Europe over the past decade. Recently, the 50,000th rail made its journey across the route. Trains are now being rerouted from Ukraine and countries like Lithuania should expect to see their rail traffic severely affected due to the sanctions placed on Russia.
Ship owners have already started avoiding voyage routes in the Black Sea which contains the largest container terminal, Odessa.
Both the major countries involved in the war are major names in the global production of nickel, copper and iron. They are also responsible for the manufacture and export of other raw materials such as neon, palladium and platinum.
The fear of sanctions being placed on Russia have already caused the prices of these materials to hike. The aerospace industries of Europe are also heavily dependent on the supply of titanium from Russia which has led Boeing and Airbus to approach alternate suppliers.
5. Mortgage Repayments:
Due to the constant rising rates of global inflation which has become 10%, the US Federal Reserve or the Bank of England can be forced to increase interest rates.
6. Fluctuating Pensions:
As the stock prices are taking major hits, some pensions that are saved in the form of stock can also be affected severely albeit on a temporary basis according to the experts.
Risk assets such as stock prices are tumbling while the prices of traditional havens such as treasury debt and gold are rising.
What Is The Conclusion?
Well, the simple conclusion that can be drawn from this entire series of events is the dire consequences wars and conflicts have on the entire global economy. A war between two countries can successfully crush the economy of a different country on a separate continent altogether.
Wars are unnecessary and severely expensive and damaging on all scales. The Russia-Ukraine war is the worst conflict to hit Europe since the Second World War and the only thing we can do is hope that this is resolved soon and the Ukrainian and Russian citizens caught in the crossfire can return to a life of normalcy.
Disclaimer: This article is fact-checked
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