Ukraine invasion: How our personal money links us to the rest of the world
Rising food prices, soaring fuel costs and shocks in the stock market: how the invasion of Ukraine will affect your personal finances, reports Rebecca Goodman
![The headquarters of the Kharkiv administration in Ukraine after shelling from Russian forces](https://static.independent.co.uk/2022/03/01/09/newFile-3.jpg)
The harrowing and disturbing news from Ukraine continues and the war is having a direct impact on global finances, including a hike to food and fuel costs.
The Russian invasion of Ukraine has already caused huge economic turmoil, along with the political ramifications and a refugee crisis.
It’s a tragic situation where countless lives are being lost and while the war and its ramifications go way beyond our own personal finances, it will impact them.
A plane takes just three and a half hours from London to Kyiv, and the close ties between Ukraine and the rest of the world, especially the UK and Europe, have been repeatedly exposed in the last week.
International leaders have called for an end to Russia’s invasion and a range of financial sanctions have been placed on Russia.
But we are already seeing historic highs in petrol costs, rising energy prices, and a spike to global food prices as a result.
This is on top of the UK’s cost-of-living crisis, with inflation rising to 5.5 per cent in January and set to go up further and the cost of almost everything heading up, most notably energy prices.
A range of further price hikes are also expected in April including national insurance which will rise to 13.25 per cent, from 12 per cent, and council tax bills which will go up by an average of 2 per cent.
As we see the immediate consequences of the war on rising prices, it’s impossible not to look at how the UK and Ukraine, and all other countries in the world, are so closely connected.
It’s impossible to isolate a conflict in one country from the impact it will have around the world, on everything from global stock markets and supply chains to food and fuel costs.
Fuel and energy prices have been at the forefront of the financial headlines for good reason. Russia is the world’s third largest oil producer, and the war has caused a spike to the price of crude oil, with a barrel rising to almost $100.
As a result, petrol prices, which were already at record highs thanks to the impact of the pandemic, have now hit new highs, of 151p for petrol and 154.72p for diesel, according to the RAC. This means filling a 55-litre car now costs an average of £81.41 and costs are expected to continue rising.
Energy prices are also being impacted by the war. Russia has said gas prices will double, after Germany refused to open Nord Stream 2, a new pipeline from Russia.
This comes as energy costs were already rising to unaffordable prices for many. In April bills will rise by an average of 50 per cent for millions and are expected to go up further under Ofgem’s price cap which is reviewed every six months.
Global food prices are expected to continue rising thanks to the war disrupting supply chains. Ukraine and Russia account for a third of the world’s wheat exports, 80 per cent of sunflower oil production, and a fifth of corn trade, according to data from the US Department of Agriculture.
Around 90 per cent of grain exports leave Ukraine by sea, yet there is a ban in place on commercial vessels travelling through the sea of Azov, which is connected to the Black Sea, and Ukrainian ports are closed.
The UK isn’t a main market for these products, but fewer exports are likely to hit global food prices. The UK also imports chemicals for fertilisers from Russia, and this could hit UK farmers and harvests, which are already facing rises to soaring energy costs.
The war has also caused investment volatility, including sharp market drops. Yet it is normal for global events to cause havoc to the stock market, at least in the short term, as we saw at the start of the pandemic in 2020.
This is due to the fact that markets hate uncertainty and the events in Ukraine and Russia are still extremely unstable.
Yet for anyone worried about their investments, changing a portfolio is not advised.
Jason Hollands, managing director of investing platform Bestinvest, said: “Chopping and changing your investment portfolio in reaction to news events is fraught with risk. It can be like trying to change an aircraft engine mid-flight.
“We’ve seen this in the last 48 hours when a significant slide in major equity markets has been followed by a rebound. The worst days for markets are often followed by some of the best days, so it is often the case that private investors can be caught short when making switches while prices are lurching all over the place.”
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