THE FALLOUT FROM UKRAINE
You don’t need us to tell you that Russia’s invasion of Ukraine—and Western sanctions on Russia—are playing havoc with your finances. You’re reminded of the pain afflicting your pocketbook every time you fill your gas tank. But the collateral damage doesn’t end there. Americans are spending more at the supermarket, mortgage rates are higher, and investors have experienced heavy casualties in their portfolios.
Sanctions on Russia will exacerbate already high inflation, which reached 7.9% in February. Russia’s main contributions to the world economy are commodities—oil, gas, wheat, nickel, aluminum, palladium. To the extent that sanctions cut off those exports, prices will climb still higher. For the global economy, this is the biggest hit since the onset of COVID-19. How bad will the pain get?
Household budgets. The average price of a gallon of regular gas breached $4 in early March, and gas prices were quickly heading higher. To add even more price pressure, on March 8, President Biden said he was banning all imports of oil and natural gas from Russia. The United Kingdom also announced a ban on all Russian oil products by the end of the year. European Union officials unveiled a separate plan to cut Russian gas imports by about two-thirds this year. Replacing all those lost barrels of Russian oil and refined fuels probably can’t be done, at least in the near term, because Russia is the world’s third-largest oil producer after the U.S. and Saudi Arabia.
This story is from the May 2022 edition of Kiplinger's Personal Finance.
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This story is from the May 2022 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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