Price surge due to Russia Ukraine War

Russia Ukraine War impact; the prices of these essential things are sure to shoot up

Due to the war between Russia and Ukraine, commodity and energy prices including that of wheat and some other grain surged. These added to all inflationary pressures from the disruptions of the supply chain and the Covid-19 pandemic’s rebound. Such price surge will be having a worldwide effect, mainly on poor households for whom fuel and food are a huge part of expenses. If this conflict escalates we may witness more devastating economic damage. Russia’s sanctions will be having a significant effect on the worldwide economy along with financial markets and huge spillover to different countries. In some countries, this crisis has created an adverse shock to activity and inflation in the middle of already increased pressures of price.

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Fall in stocks and slid in the market with conflict rampage

????????With the Russian forces stepping up attacks on cities in Ukraine, Asian stock markets slip and a surge in oil prices took place over $5 each barrel.

????????Invasion of Putin aroused fears of worldwide economic turmoil and thus markets of Southeast Asia, Hong Kong, Tokyo, Shanghai Southeast Asia and New Zealand declined

????????A loss of 1.5% took place in the benchmark index S&P of Wall Street.

????????The prices of oil rose even after an agreement of releasing 60 million barrels by the US and other main governments in the International Energy Agency from strategic reserves for stabilizing supply.

????????Sensex in India opened at 55,330.77 which is 1.6 % lower.

????????The 10-year Treasury’s yield fell by some unusually huge margin to 1.73 % from 1.83 %.

????????Russia’s Ruble’s value decreases further to 0.9 Cents.

????????S&P 500 fell to 4306.26 on Wall Street.

????????The Nasdaq composite fell 1.6% to 13,532.46.

????????Over 70 % of stocks in the S&P 500 closed much lower.

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Petrol reaches a fresh record

????????The prices of petrol have hit a new high record with the surge in gas and oil.

????????The petrol prices in the UK hit 155p / litre on average.

????????As per some analysts the energy bills in the UK may reach as high as ￡3,000 per year because of the surge in gas and oil prices.

????????Russia supplies almost a third of the need for crude oil in Europe.

????????Brent crude’s price increased by over a fifth last week during the fears of a decrease in supplies of Russia.

????????On Monday after it peaked at $139.13 each barrel, Brent crude’s price fell again to around $125.

????????Due to the latest increase in petrol prices in the UK, the cost has been pushed to over ￡7 per gallon.

????????To fill up a car with a tank of 55 litres will cost almost ￡17 over one year ago, rising from ￡68.60 to ￡85.59.

????????This crisis will constantly impact share markets.

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Gas and oil prices soar

????????The prices have sharply increased with the two main oil benchmarks trading now at above $110 which represents a more 15 % increase in the last week.

????????If the administration wishes to reduce gas prices, there are few mechanisms to unlock.

????????It includes reducing or suspending the diesel and gasoline federal taxes that are 24.4 and 18.4 cents each gallon respectively.

????????It may work similarly with the state governments.

????????State taxes 30.63 and 32.39 cents each gallon on average. So combined gains can amount to $0.5 each gallon.

????????Release more from the strategic reserves to the market can be another option.

????????But this can have a limited effect on price and may be short-lived.

????????Anything that is released now must be replenished later.

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Rising prices of energy

????????It is difficult to predict which current situation and market will move.

????????But it looks like we will go through a period of high energy price that is driven by the war along with strong market fundamentals.

????????These high prices are passed to the consumers at the pump in the heating, gas, and electricity bills.

????????High prices of energy causing increased cost of all goods and services virtually and further fuels expectations of inflation.

????????From such an increase, few governments may be introducing measures to cushion consumers.

????????In a lot of countries gasoline and diesel taxes represent more than half of what is being paid by all consumers at the pump.

????????All of the costs must be picked up by the consumers.

????????Thus we will be in a prolonged period of costly energy.

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Gold, silver and other metal prices accelerated

????????After the war declaration, acceleration in price was seen on precious metals such as gold and silver.

????????The surge took place after the escalation of confrontation in Russia and Ukraine.

????????Spot gold price saw a surge to $1943.86 for each ounce in the international market.

????????The surge was by 1.9 %.

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Mobiles and microchips supply stalled

????????Ukraine is neon gas’ largest producer.?It is used for the laser that is used in making the chip.

·????????Ukraine?exports?almost 90% of?its?semiconductor grade neon to the?United States.

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????????World depends on Russia for palladium supply. It supplies 35 % of Ishka that is used for making semiconductors.

????????Due to the tension between the two countries many companies will be impacted.

????????Because of the sanctions by the US, Russia’s supply of microchips will stop.

????????Companies having the option of America, Canada, or China. But it will be not sufficient and too slow.

????????If the war continues for long, then the mobile companies will face problems in managing things.

????????Thus the microchips supply used in the mobiles and semiconductors will get stalled.

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A huge impact of food and dairy products

????????Food price may rise to 20 % from where it is currently.

????????Global food trade is controlled by both countries.

????????52 % of the sunflower and 1/3rd of the worldwide cereal export come in from Russia.

????????International price of food products like dairy products and vegetable oils averaged 140.7 points in January.

????????As Russia is the largest exporter of wheat and Ukraine is the fifth largest, it will also stay in focus.

????????50 countries depend on wheat in Russia and Ukraine.

????????Thus the situation is highly critical.

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Real estate costs might go up

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·???????Prices of Raw materials used like cement will increase so construction costs will go up.

·???????Price of petrol, gas, energy, will have an impact on real estate so if experts are to be believed the constructions costs will go up in coming years.

·???????An increase in metal prices like aluminum will affect the construction costs. Russia is the main manufacturer of Aluminium.

·???????In modern constructions aluminum is used in large quantities, due to the current situation production of aluminum is affected which will shoot the price.

·???????Another metal that will soar is Palladium as Russia is the largest exporter.

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Conclusion

These are all the challenges due to the Russia-Ukraine conflict. So we need to make cautious decisions and create demand for good products. Most importantly if we can afford it we must be ready to pay a lot for an alternative that will drive the change we want to see.?