By Alice Seeley
The Russian invasion of Ukraine will have major consequences worldwide, reaching even the average American.
These consequences can be seen most in the stock markets. As Ukrainian forces resist Russia, the Western World is stepping up sanctions against Russian President Vladimir Putin and his allies. Western institutions have already cut off Russian banks from the global financial network, and the Central Bank of Russia increased its interest rate to 20% from 9.5% and stopped stock market trading.
As of Monday, Feb. 28, the Dow Jones Industrial Average was down almost 200 points, while the S&P 500 lost 0.3% and the tech-heavy Nasdaq Composite gained 0.4%. The U.S. West Texas Intermediate futures climbed over 7.7% to trade $99.15.
The price of oil reached an eight-year high on Monday, Feb. 28, as traders responded to the Russian invasion, with Brent crude rising to $104.69 per barrel. Although the U.S. imports little Russian oil, energy commodity markets are global, and one part of the world influences how much people pay for energy elsewhere.
According to Patrick DeHaan, head of petroleum analysis at GasBuddy, the conflict will increase average gas prices across the U.S. He predicted that gas will hit an average of $4 a gallon due to the invasion. It is already topping $5 a gallon in California.
Food prices are expected to increase as well.
Christian Bogmans, an economist at the International Monetary Fund, stated that because Russia and Ukraine make up 30% of global wheat exports, the conflict in Ukraine will increase food price inflation, which was predicted to stabilize this year. The disruption will drive food prices higher and put pressure on U.S. consumers.
These rising prices will leave U.S. consumers paying more for necessities with less money for non-essential goods and services.
In the U.S., this will affect mostly the middle and working classes Chief Economist at RSM, Joe Brusuelas, said.
