by The invasion could have two effects — raising prices and slowing economic activity. The Federal Reserve in the United States is already dealing with the highest inflation rate in 40 years, with 7.5 percent in January, and is poised to raise interest rates next month. Higher energy prices sparked by a European conflict may be temporary, but they could fuel fears of a wage-price spiral.
“We could witness a new inflation burst,” said Christopher Miller, an assistant professor at Tufts University and a visiting scholar at the American Enterprise Institute.
Possible shortages of vital metals such as palladium, aluminium, and nickel also drive inflation fears, causing more upheaval to global supply networks already strained by the epidemic, trucker blockades in Canada, and semiconductor shortages.
Palladium, which is used in car exhaust systems, mobile phones, and even dental fillings, has risen sharply in recent weeks amid fears that Russia, the world’s largest exporter of metal, maybe shut off from global markets.
Nickel, which is needed to create steel and electric car batteries, has also risen in price.
According to Lars Stenqvist, the Swedish truck maker’s chief technology officer, it’s too early to assess the precise consequences of an armed conflict.
“It is a dire situation,” he added.
Mr. Stenqvist said Monday, “We have a variety of alternatives on the table, and we are following the situation day by day.”
If Mr. Putin chooses to react, the West has taken precautions to mitigate the impact on Europe.
