The impact of the ongoing war between Russia and Ukraine is not being felt just in these countries alone; it is also having a global impact, affecting prices of everyday items in the UK. Below, we highlight some of the main things that will affect prices for UK households.
Due to record-high inflation rates at 7%, UK households are already feeling the pinch of the rising costs of everyday goods. There have been reports of increasingly more families relying on food banks or people switching their weekly shop and looking for cheaper, and often less nutritional, alternatives in order to make ends meet and feed their families.
Despite UK food producers not relying on Russia or Ukraine for many food items particularly, they will still feel an economic fallout due to associated costs, for example tinned cans, transport and packaging.
“The cost of everyday food items may increase due to the global reliance on Ukraine and Russia for wheat, flour and corn,” explains Alfie Usher, the founder of military price comparison, Forces Compare.
“This also impacts other industries such as poultry farming that feed on these foodstuffs. The countries are responsible for the export of around a quarter of the world’s wheat supply. As a result, Brits can expect to see increased prices for foods such as bread, flour and cereal.”
Fuel and energy prices are already at an all-time high, yet the Russia-Ukraine conflict has pushed these prices even higher. As home to a large majority of the world’s oil supply, Russia has a lot of power when it comes to global fuel prices. Consequently, the conflict has meant that wholesales gas prices have more than doubled and the price of oil is at the highest in nearly 14 years.
For UK households, they are feeling the hit with their average petrol and diesel prices; latest prices are 155p per litre for petrol and 161p per litre for diesel. Despite the UK only getting 6% of its crude oil and 5% of its gas from Russia, they are suffering due to the impact on wholesale prices. Not only that, but the EU sources nearly half of its gas from Russia and are now having to look elsewhere for their gas needs.
Ongoing concern about President Putin “weaponising” Russia’s resources has led to consumer panic and a surge in demand, which has also led to increased fuel prices.
In periods of high inflation, interest rates are also higher which, in turn, makes mortgage repayments more expensive. Inflation has already risen to the highest level in more than 30 years and economists predict that this figure may increase to up to 10% if the Russian-Ukraine conflict continues.
“For those on a fixed-rate mortgage, they are unlikely to feel the hit,” explains Dan Kettle of online finance company, Pheabs. “However, those on a variable rate will suffer and this could result in paying a few hundred or even thousand pounds per month on their mortgage. Furthermore, the rising interest rates could deter homeowners from purchasing a home at this time.”
Russia is a global superpower meaning that when stocks crash there, the impact is felt globally. For example, the UK’s FTSE 100 index has fallen more than 6% since Russia declared war on Ukraine.
“For those who have investments in the stock market, including their pension savings, this may have decreased in overall value,” explains Ben Sweiry of fintech startup, Dime Alley.
“Although this may recuperate in the future, it is likely that anyone who currently has investments will experience ongoing market volatility in the near future.”
Russia is one of the largest global suppliers of metal affecting everything from car parts to tin cans. This means that whether you are drinking from a can or using copper wire as part of a renovation project, you can expect to experience an increase in the price of everyday metal goods.