A new reality for Russians has emerged: soaring prices and panic-buying. Sanctions imposed by the West are expected to send the country into its worst recession since the fall of the Soviet Union three decades ago. In a country where the average monthly wage is £520 – a quarter of the UK – the price of a new TV has risen from £150 to £350 now. Sugar prices have risen by 30% while instant coffee prices have risen by 70%.
Despite this, millions of Russian families will be affected by the economic fallout. As a result, both the global economy and financial markets are intertwined Events on one side of the planet can send shockwaves to the other, as Covid demonstrated. For example, an invasion of Ukraine by Russia is likely to raise already high living costs in the United States as well as rattle investors’ confidence in the economy and possibly stall it.
As a result of fears that Russian energy supplies could be disrupted by this conflict, oil prices have risen to levels not seen since 2014. According to Rystad Energy, Russia produced 9.7 million barrels of oil per day last year. More oil is produced in the United States than in Iraq and Canada combined.
Stockholders and investors alike are on the lookout for any additional supply shortfalls, which could come in the form of war-damaged infrastructure, sanctions against Russia, or Moscow deciding to weaponize exports. The biggest issue confronting the US economy is inflation. An invasion by Russia could exacerbate the situation even further.
According to an analysis provided to CNN by RSM, if oil prices rise to $110 per barrel, the inflation rate will exceed 10% year over year. This is an increase from the current 7.5%.
Inflation in the United States hasn’t hit 10% since 1981. Higher oil and natural gas prices would also increase the cost of heating and powering your home. The Federal Reserve would be compelled to step up its efforts to rein in prices if inflation rose above 10%.
A faster pace of interest rate rises may be necessary in order to rein in inflation.
Borrowing costs will rise for consumers on everything from mortgages and car loans to credit cards as a result of the Fed’s interest rate increases. Want-to-be home buyers face an uphill battle now that mortgage rates have already reached pre-Covid levels. It would be more expensive to fly, which would increase the costs of transportation and inputs for businesses already dealing with rising costs. Consumers can expect price increases as businesses pass on some of the higher costs to them.
Supply shortages have affected women’s hygiene products, and the cost of a pregnancy test has increased by more than 80%. There are also shortages of about 80 types of medicine, such as insulin and painkillers, which are in short supply. Inflation is expected to reach 24% this year, according to analysts. In an effort to find out how the measures have affected the lives of Russians, the Mail on Sunday spoke to a variety of people in the country.
“Black markets have opened up,” a 33-year-old photographer named Oleg said. As a precaution, I’ve hidden some money under my bed by using a backstreet currency exchange. In my opinion, the notes are not authentic.’ This is what the Germans must have felt like under Hitler, he said. ‘I can’t save enough money to emigrate,’ laments Ivan, a 26-year-old programmer. ‘There is no sugar in shops and, as soon as it arrives, all the grandmothers fight over it,” said 20-year-old student Liza.
Sanitary pads are being sold online at inflated prices by people who stockpile them in their homes. There have been over 500 companies that have left Russia, according to Yale. “Imagine everything closed except Tesco and Primark, and half of the shelves are just toilet roll,” said 32-year-old Daria, a business owner. “This feels like a betrayal. A new North Korea is emerging in Russia.”