Cuts to imports of Russian oil and gas by Western countries in protest against the invasion of Ukraine will put further pressure on consumer finances.
Commodity and fuel prices are likely to rise and disposable income could plunge at a rate not experienced since 1955, the BBC reported.
The UK said yesterday (March 8) that it would cut out imports of Russian oil by the end of this year, as the US and EU also revealed new limits on Russian oil and gas.
Motoring organsation the RAC told the BBC that petrol prices could reach as much as £1.65 per litre soon.
RAC fuel spokesman Simon Williamson told the broadcaster: “It’s not just about what consumers pay at the pump. Everything in our shops has ultimately been moved by a diesel-powered lorry, and businesses are obviously likely to pass on these costs.”
Households will be hit hard
Economists CEBR believed that rising prices and sanctions were likely to impact the UK economy and slashed its forecast of GDP growth this year from 4.2% to 1.9%.
CEBR anticipated that inflation would rise to 8.7% in the second quarter and disposable incomes would slide by 4.8% this year. That would be the biggest fall since 1955.
The organisation said: “The forecast fall in living standards this year is an estimated £71bn, which amounts to £2,553 per household.”
Consumers and retailers were already contending with an inflationary environment that could limit shoppers’ spending before Russia’s invasion of the Ukraine, following disruption during the Covid pandemic.
Yesterday more consumer companies, including McDonald’s and Starbucks, ceased operations in Russia following its invasion of Ukraine.
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