How fall-out from Ukraine crisis will affect us all
- Credit: AP
The tense stand-off between Russia and Ukraine might be happening more than 1,400 miles away, but its effects are being felt here. As the world waits to see how the crisis develops, CHRIS BISHOP explains the far-reaching consequences that will affect us all
The threatened Russian invasion of neighbouring Ukraine is one factor in soaring petrol prices.
They have now hit an average 148.02p per litre, while diesel has jumped to a new high of 151.57p p/l.
Drivers may well be paying even more in rural parts of East Anglia, where forecourt prices tend to be higher because of added distribution costs to remoter areas.
RAC fuel spokesman Simon Williams said: "The oil price is rising due to tensions between Russia - the world's third-biggest oil producer - and Ukraine, along with oil production remaining out of kilter with demand as the world emerges from the pandemic.
"As a result, drivers in the UK could be in for an even worse ride as pump prices look certain to go up even more."
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It's not just drivers who'll be hit in the pocket. With just about everything on the supermarket shelves transported by lorry, added distribution costs are certain to see prices rise at the tills.
COST OF LIVING
Much has already been made of what experts say will be the biggest squeeze on personal finances in generations. And international tensions are only going to make that even more acute.
Spiralling inflation has already seen the cost of living rise by around 5pc in the year to December 2021, latest figures show.
This includes the cost of food, clothes, fuel and housing.
Fuel bills are set to rise from April, after the so-called price cap was increased by 54pc.
That means average bills are set to go up by almost £700 from £1,277 to £1,971.
But there are fears the Ukraine conflict could see Russia cut gas supplies to Europe, meaning shortages could drive prices even higher when the cap is set again, in six months' time. Pipelines which supply gas run through Ukraine.
The added uncertainty comes on top of already-planned rises to things like council tax, which could increase by up to 3pc, a 1.25pc increase in national insurance and higher water bills.
With inflation at its highest level for three decades, food prices are already heading skywards.
A pick and mix of different analysts says the price of a joint of beef went up by a third in 2021. The average Sunday dinner for a family of four cost £27.50 more. And the price of margarine went up by 23pc, while vegetable oil was up by 13pc.
Research by the BBC found the price of a so-called standard basket of 15 everyday items had gone up from £15.84 to £17.16 between 2020 and 2021.
Industry experts say the worst is yet to come, as other "costs and problems" find their way through the food chain to our shopping baskets.
If oil prices keep rising, because of the situation in Ukraine, the price of moving food from the field to our plates will go up.
And it wont just be consumers who feel the pinch. Farmers may well find less demand for produce as prices increase at a time when their customers are less able to afford them.
The stand-off over Ukraine has sent shivers through the stock market.
Nearly £58bn was wiped from the value of London's top 350 companies within hours of markets reopening after the weekend.
Share prices have tumbled around the world in response to fears over oil and gas supplies.
Pension funds which invest in the markets will be feeling the chill. The benchmark FTSE100 and FTSE250 indexes, staple fodder for fund managers, fell by almost 2pc on Monday.
A jittery rally on Tuesday saw investors regain some of their losses, but uncertainty will blow through the markets until the crisis is resolved.
That means a headache for retired or soon-to-retire people who may be relying on the added cushion of savings in a so-called money purchase pension, built up over their working lives, to supplement their state pension.
The worst-case scenario could see the value of savings pots decline at a time when living costs are increasing sharply.
What happens next depends almost completely on what Vladimir Putin decides to do.
While the Russian defence ministry said on Tuesday afternoon that some of its forces were starting to withdraw from the Ukrainian border, NATO said it had seen no evidence of de-escalation.
While ministers threaten sanctions against Russia akin to precision strikes on its economy, we can not escape the fact we are in some ways partly dependant on the country for oil and gas.
Then there is the real possibility of cyber attack against banks and other institutions, launched from the east against countries like the UK which are supportive of Ukraine.
A relatively minor glitch in the fuel distribution system caused panic buying that led to queues at the forecourts and fuel shortages last September.
Some of the consequences of a Russian invasion of Ukraine are easy to predict. Others are less so, but that does not mean we will not notice them if they come to pass.