How Does the Russian/Ukrainian conflict financially affect Australians?
How Does the Russian/Ukrainian conflict financially affect Australians
The current Ukrainian/Russian conflict has raised many issues for Australians. We now live in a global economy. Nothing of this scale can happen without having ripples effects on all aspects of the global ecosystem, from social, political and economic.
We will give you a brief overview of the different aspects of Australian life that may be affected in the foreseeable future.
1. Mortgages and interest rates
First of all, if the Federal Reserve is planning to increase rates next month. This could mean mortgages, credit cards and auto loans could become quite a bit more expensive. However, there are those who disagree that the Fed Res will make the increase. As they do not want to create higher inflation than we are currently experiencing.
It seems unlikely that the Federal Reserve will combine the skyrocketing cost of living with a hike in interest rates. But we suggest that you ensure you are in the best situation you could hope to be in. You can contact us here to get in touch with our team and find out what your best option is.
2. Fuel Increases
Russia is the world’s second-biggest exporter of crude oil and refined petrol and the world’s largest exporter of natural gas. With the Biden administration closing down the Keystone XL pipeline and unlikely to reopen it, it means that the longer this conflict continues, the higher the prices will climb.
With an average of a week to pass on the changes in the retail market, Australians could see E10 petrol reaching over $2.10 per litre. With only two local refineries left in the country, 90% of our refined petrol is imported from multiple Asian countries, including Korea, Japan, Malaysia and China.
We can hope that if the crisis gets too far along, the government may decrease or remove some of the taxes on fuel supply to help the regular Aussie from astronomical fuel prices.
3. Local Supply Chain
The skyrocketing fuel prices don’t just mean price increases at the pump. Australia is an economy run on the backs of truckers. With such a dramatic increase in fuel prices, the regular Aussie can expect to see an increase in any and all aspects of the supply train. Many truckers operate on contract terms and thus the price of fuel is directly passed on to the consumer.
The average price of groceries including meat, veggies, fruit and even perishables could all rise. The price rise could also spell trouble for many contractors, meaning delays in supply chains and many usually items missing from the shelves.
Perhaps a good way to keep the budget under control is to look to the local farmers’ market for fruits, veggies and other produce. ANZ said has said that inflation could rise by 5% in the next quarter, which will affect most foodstuffs and consumer goods.
We suggest setting up a new budget that reflects these difficult times.
4. Global Supply Chain
Much like the local supply chain, the increased fuel prices will increase many everyday items for Australians. The price to produce due to an increase in energy and shipping costs will likely push most of the world into a recession.
Combined with many of the political tensions with China, importing goods has become an expensive task. And economic sanctions placed on Russia will continue to have a ripple effect throughout the world.
With many retailers removing Russian made goods from shelves, there are a few products that won’t be making an appearance. Many bottle shops like Dan Murphy’s, BWS and ALH Hotels have removed all Russian vodkas.
5. Stock Markets
The initial shock of the Ukrainian/Russian conflict sent ripples through the stock market. Many markets were thrown into upheaval.
However, as expected, pharmaceutical and weapons suppliers’ stocks have skyrocketed. This trend will continue to do so for the foreseeable future.
Also, the Russin stock market was allowed to open briefly which saw a rise in the 33 Russian companies allowed to trade. These restrictions will likely stay for the time being and Australian investors should be aware of this.
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Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.