By Dean Dunham 25 February 2022
The headlines have naturally been dominated this week with news of Russia’s invasion of Ukraine. But Brits are also being warned of knock-on effects of the invasion closer to home, with major hikes in the price of living on the cards following threats of runaway inflation, increased interest rates, surges in oil prices, export issues with food ingredients, and mayhem for the stock market. So what does this actually mean for the UK consumer and what price increases will we actually see to everyday items and outgoings? Here’s what you need to know:
Your mortgage payments
A rise in inflation is likely to be met with a rise in interest rates, causing interest payments on variable mortgages to increase. By way of example a 0. 5% increase in interest rates would increase the cost of a £100,000 mortgage by £60 per month
Your food shopping costs
UK food prices could see an almost immediate hike as Ukraine and Russia export much of the world’s grain. Since the invasion we have already seen a significant increase in the price of wheat and the cost of transporting goods has gone through the roof. This will put up the price of flour and bread, as well as meat, dairy and eggs because wheat and corn used for animal feed have also increased.
The Ukraine crisis will even hike the cost of some of our favourite takeaways, as the National Federation of Fish Fryers has warned that the average price of fish and chips could soon hit £10, with cod supplies now 75 per cent more expensive than in October.
Your fuel costs
Petrol and diesel prices are already at record highs and the conflict in Ukraine will inevitably send the cost even higher.
On Thursday, unleaded inched closer to “the grim milestone” of £1.50 a litre at 149.67p while diesel reached 153.05p. These prices will almost certainly continue to increase meaning filling up a standard family car could cost around £90 for the first time ever.
Your energy costs
Russia is the world’s largest exporter of gas and the third biggest producer of oil.
The price of a barrel of crude is already at a seven-year high which will inevitably feed through to household bills when the next price cap on average annual bills is set in August.
The cap is already due to rise from £1,277 to £1,971 in April and could go £3000 in the autumn.
Your holiday cost
Airlines are already avoiding Ukraine airspace which alongside the increasing costs of fuel will push up the cost of flying, as they are forced to take longer routes. An increase in costs for the airlines will inevitably result in an increase in holiday costs for the consumer.
Holidaymakers pockets will also be hit when it comes to buying currency, where increased interest rates will bite.