The world was contending with a huge inflation problem long before Russia invaded Ukraine as the recovery from Covid led to a spike in demand.
But the invasion is driving up prices of precious commodities such as fuel, food and key materials even further as traders brace for supply chain disruption amid the threat of further sanctions. Here are six commodities that are soaring in value as Russian supplies face being cut off from global trade.
Gas prices rocketed to as much as 73.8pc to 800p per therm on Monday, creating an increase of more than 200pc so far this year.
Gains started well before Russian troops crossed into Ukraine amid lower supplies from Moscow and high demand in the post-Covid recovery. The war is stoking fears of Russian gas being cut off by potential Western sanctions – or by the Kremlin in retaliation.
British households are bracing for the near £700 increase in the energy price cap in April, to £1,971 per year. In October, however, the cost of heating homes is likely to climb even further as another cap is introduced.
JP Morgan economist Allan Monks warns energy bills could rise a further 70pc in October if Monday’s levels are sustained.
He added: “This could easily be large enough to generate a technical recession in the UK later this year, although we would expect a stronger fiscal response if this scenario were to play out.”
Benchmark Brent crude soared almost 18pc to hit $139 per barrel on Monday, highs last seen in 2008, before pulling back, after the US suggested Western allies are in discussions over a ban on Russia crude imports. Prices have rocketed 60pc this year as Russia’s invasion threatened to disrupt European energy supplies.
Drivers will rapidly feel the pinch. Petrol prices have reached a record high of 155p per litre, jumping almost 4p in one week, according to the RAC, meaning it is currently almost £17 more expensive to fill a typical 55-litre tank car compared to a year ago, noted the AA.
If the West introduced an energy embargo, banning Russian oil and gas imports, more expensive fuel could cost households in developed countries an extra $400bn on an annualised basis in 2022-23, according to Capital Economics. Its economist Caroline Bain warned the knock on demand from a surge in energy costs “would be a lot bigger in Europe than in the US” and could hit global GDP by 1pc when combined with the collapse in Russian output.
Few shoppers will link the cost of a loaf of bread to Putin’s ambitions to take over Ukraine – known as the “breadbasket of Europe” and an agricultural powerhouse. Global wheat prices soared to their highest levels in 14 years on Monday, up more than 14pc. The cost of the commodity has grown by 52pc this year.
Analysts at Saxo Bank said prices have been boosted by fears for “the wheat supply this year as planting season approaches in Ukraine”.
Russia and Ukraine together make up more than a quarter of global wheat exports and a fifth of corn, meaning the invasion threatens to push up food prices even further.
With wheat making up around 15pc of the cost of bread, economists estimate that a 50pc rise would lift the price of a typical loaf by 10p to £1.30.
Prices for palladium surged 15pc to record highs of more than $3,400 per ounce. With Russia and Ukraine responsible for 37pc of all global production, according to data from Flexport, it is up 76pc so far this year.
The palladium market was tight before the current crisis, having been under supplied for almost a decade through 2020, making the impact of the latest shock all the more severe.
Most notable for its use in catalytic reactions, particularly in devices that curb pollution powered by fossil fuels, the metal has wider uses including in electronics, jewellery and dental fillings.
Analysts at Goldman Sachs say that while more palladium could be sold in Asia in the event of sanctions, prices could rise to $5,000 an ounce.
Nickel is a standout example of how war in Ukraine has forced a rapid re-assessment of base metals prices. It climbed as much as 90pc intraday on Monday, one of the most extreme moves ever recorded on the London Metal Exchange. It is up 166pc so far this year.
Used to produce lithium-ion batteries and stainless steel, the metal had already been pushed higher last week as shipping companies and banks cut ties with Russia – one of the world’s biggest suppliers – which added to a historically tight market.
“Prices are likely to remain highly volatile, until the real supply impact becomes clearer and prices can start to settle at a new equilibrium,” according to Morgan Stanley analysts.
Aluminium prices touched a record high on Monday, up 5.8pc rise, before falling back in later trading. Global manufacturers, particularly those in the automotive sector, are reliant on Russian supply, meaning the lightweight metal has risen 43pc so far in 2022.
Used in everything from plane bodies to drinking cans, several of the world’s biggest producers of aluminium are based in Russia, including second largest Rusal.
Rusal, founded by Oleg Deripaska, last week said its Mykolaiv facility in Ukraine had halted shipments – that alone could take a sizeable chunk out of the market.