Tom Tugendhat, chair of the Foreign Affairs Committee, said that if European leaders did not take action against Vladimir Putin, "you can forget about petrol at £1.70 a litre, which is where it's heading now. It will be significantly higher."
He Told the BBC's Today Programme: "10 per cent of the world's wheat is grown in Ukraine and the idea that this year's going to be a good crop, I'm afraid, is for the birds.
"This is absolutely one of those moments where we're going to see the cost-of-living crisis driven by war."
Oil prices spiked to their highest since 2014 on Thursday as markets reacted to news of a full-scale invasion.
Brent crude hit $102.48 rising by more than 5 per cent as reports of explosions in Kiev and other major cities in the country filtered across the globe.
Russia is one of the world’s largest oil producers and and is a major supplier to Europe. It is also the largest supplier of natural gas to the continent.
Ukraine is also crucial for Europe's gas supplies, with major pipelines crossing the country from Russia.
Russia’s energy sector has not yet been targeted. However, with the US, EU and UK all set to discuss tougher measures on Thursday, there are concerns oil supply could be hit.
That would put a further squeeze on UK households already facing their biggest drop in living standards for decades.
Before news of the invasion, real wages are expected to drop by 2.3 per cent this year as pay packets fail to keep up with surging prices
The key driver of higher inflation has been higher energy prices, including gas and oil.
Russia has been accused for months of holding back its gas supplies to apply pressure on European capitals.
Mr Tugendhat added: "The Russian people are still flying using planes with Rolls Royce and General Electric engines.
"The money still needs to be transferred and the cost of transferring that money still has an effect on the Russian Exchequer.
The UK is also expected to announce tougher sanctions on Thursday after a first "barrage" was widely condemned as being too weak.
Liz Truss, foreign secretary, has indicated that Russian companies including those in the defence, chemicals, tech and energy sectors will also be targeted.
Experts have warned that such measures would have an impact in the UK as well as on Russia.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies