The Ukraine-Russia war may drive up expenses for Americans
Key takeaways:
- According to economists, Russia's attack on Ukraine prior week is driving up the cost of gasoline and may lead to increased prices for Food and electronics like smartphones.
- Russia is a significant exporter of oil, wheat, and palladium. Costs for those materials have climbed as a result.
- Inflation is already growing at its most rapid annual rate in 40 years.
Gasoline, Food, and electronic devices' costs might be escalated:
The financial consequences of Russia's attack on Ukraine a week back have resonated worldwide, leaving many families to wonder how the war might strike their wallets.
The short answer: Costs may increase, particularly for gasoline (and certainly already have). According to economists, prices for food and goods like smartphones may also grow.
Inflation would primarily result from poverty and increasing costs of raw materials like oil, wheat, and metals like palladium — all of which Russia is a significant producer.
It would also come when customer expenses grow at their quickest annual rate in 40 years.
Yet some of the inflation (if it comes to hand) will probably take months to emerge. The timing and scale are challenging to expect given the fluidity of the military battle, the novelty of Western boycotts against Russia, and the prospect of yet harsher ones.
"What makes projecting these things so challenging is, all these efforts are so new and so unusual as a model," according to Julia Friedlander, a senior fellow at the Atlantic Council and ex-advisor on boycotts policy at the U.S. Treasury Department.
"What's it like to bring the 11th largest economy offline in days?" she told.
The Federal Reserve is also anticipated to increase interest rates this month to combat inflation.
Oil and gasoline
According to economists, the cost of gasoline is how customers presumably feel the conflict's inflationary effect in the short term. Indeed, gas costs have grown since Russia's saber-rattling began, even ere the Feb. 24 attack.