The war in Ukraine is sending an impact not only to itself and Ukraine, but nations across the world are feeling the shock in both direct and indirect ways from rising commodity prices, causing inflation to surge significantly.
The U.S. Consumer Price Index (CPI) rose 7.9% in February compared to last year, marking the fastest annual jump since 1982. The figure is higher than January’s 40-year higher rate of 4.5%. The main attribution behind surging inflation was a surge in energy prices.
The UK Office for National Statistics said consumer prices rose by 6.2% in February after a 5.5% rise in January, its highest rate since March 1992. The Reuters poll of economists had median forecasts of 5.9%.
The ONS noted the main contributor toward higher inflation was due to energy bills up by almost 25% a year again along with petrol prices among other main drivers of the red hot inflation figure. The inflation numbers would push the Bank of England to push rates further.
A surge in oil prices came after Great Powers imposed sanctions on Russia, including financial services and oil ban. However, due to being one of the global oil and gas producers and main contributor for European countries, a loss of production from Russia proves to be significant.
Global volatilities and uncertainties on the Russia and Ukraine war as well as its aftermath on the global economy led the International Monetary Fund (IMF) to possibly lower its global growth forecast next month, according to IMF managing director Kristalina Georgieva.
IMF has already downgraded the United States of America and China economic growth in January on risks from Covid-19 pandemic and also lowered global growth by 0.5 percentage points to 4.4%.
IMF’s MD said that the unprecedented sanctions imposed on Russia had caused an abrupt contraction of the Russian economy, resulting in it to face a deep recession this year. A default by Russia on its debt is no longer seen as improbable, according to Georgieva.
The IMF is due to release its updated World Economic Outlook in mid-April.