Ukraine War: How the Costs of the War Affect Russian Everyday Life

Created: 04/04/2022 22:29

By: Bettina Menzel

The ruble, the currency of Russia, plummeted after the Russian attack on Ukraine.

(Iconic image) © Schöning / Imago

The Ukraine war causes a lot of human suffering.

But it also harms people financially – and not just in Ukraine.

How the conflict affects everyday life in Russia.

Moscow - After Russia's attack on Ukraine on February 24, Kyiv estimates the war damage at at least 100 billion euros.

The damage to roads in Ukraine alone is said to amount to 30 billion euros - not to mention the human suffering of the war.

But the Ukraine conflict is also costing people in Russia dearly.

The result is high inflation, rising unemployment and partly empty supermarket shelves.

Ukraine conflict causes prices to rise – economic expert sees risk of “hyperinflation”

Official statistics agency Rosstat said in mid-March that inflation stood at 2.1 percent between March 5 and 11, the second-highest weekly reading in more than 20 years.

Annual inflation rose to 12.5 percent on March 11 from 10.4 percent the previous week, according to the Economy Ministry.

Consumer prices are still on an upward trend due to Western sanctions and shortages of raw materials.

Food, especially fruit and vegetables, became noticeably more expensive, but services, non-food products and building materials also rose in price.

The economist Michael Hüther sees the danger of hyperinflation in Russia.

"In Russia there is now a risk of a further fall in the value of the ruble and hyperinflation," Hüther, the director of the employer-related Institute of German Economics in Cologne (IW), told the Funke media group.

Hyperinflation is when prices rise by more than 50 percent.

The velocity of circulation of money is extremely high: Since prices are constantly rising, people spend their money directly to forestall further price increases.

Ukraine conflict: empty supermarket shelves in Russia – government denies shortages

Photos of empty supermarket shelves in Russia were already circulating online in March.

There were also pictures of people queuing for sugar.

Some stores put up signs saying "There is no more sugar".

Some supermarkets also introduced rationing measures on certain products as prices soared after inflation had been high since the pandemic began.

In view of the empty supermarket shelves, the Russian authorities denied a lack of sugar or buckwheat in the country.

"As in the (first pandemic) year 2020, I would like to reassure our citizens today: We are completely self-sufficient in sugar and buckwheat," Russian Deputy Prime Minister Viktoria Abramchenko said at a government meeting on March 21, according to Russian news agencies.

Fearing Western sanctions because of the Ukraine conflict and possible bottlenecks that might result, people in Russia rushed to these foods in the supermarkets.

A sign in a supermarket in Moscow says that the sale of sugar is limited to five kilograms per day and customer.

The picture is from March 23, 2022. Some products are running out or sold out in Russia.

© Vlad Karkov / ZUMA Wire / Imago

Apple, Google, McDonald's: Numerous companies are withdrawing from Russia

Numerous companies have withdrawn from Russia in the face of the Russian war of aggression in Ukraine, including Adidas, Google, Mercedes-Benz, Coca Cola, Volkswagen, Audi, Apple, Visa and many more.

For customers, this means that they can no longer buy or use the products of these companies.

Apple, for example, no longer delivered to Russian dealers and also shut down the Russian online shop.

Anyone who called up the page received the message that the shop was currently closed - and an Apple logo appeared in rainbow colors.

At the beginning of March, the fast-food giant McDonald's also closed its approximately 850 branches in Russia in response to the Russian war of aggression against Ukraine.

"We cannot ignore the causeless human suffering that is happening in Ukraine," the company said of the move.

McDonald's has therefore decided to temporarily close all branches in Russia and to discontinue business in Russia.

Consequences of the Ukraine crisis and Western sanctions: Unemployment in Russia could rise

The withdrawal of fast-food giant McDonald's alone cost 62,000 people their jobs in Russia.

The list of companies that have stopped doing business in Russia is long.

A corresponding number of jobs will be lost.

But the disruption to supply chains could also lead to increased unemployment in Russia: "Many people will lose their jobs because companies are closing, because there is a lack of raw materials for production, because there is no demand and because people are getting poorer," he said Russian economist Andrei Movchan told

In the energy sector, certain goods are not allowed to enter Russia due to Western sanctions.

There are also restrictions in other areas, such as aircraft parts and microchips.

Russian President Vladimir Putin prepared his compatriots for the economic consequences of the war.

According to Putin, inflation and unemployment would increase.

He spoke on Russian state television that the West was pursuing a "plan for an economic blitzkrieg against Russia".

But this attempt will not work, the Kremlin boss continued.

However, the new reality requires profound changes in the Russian economy.

Consequences of the Ukraine conflict: Russia excluded from the SWIFT system and PayPal

Western sanctions also included blocking some Russian banks from making payments in the Swift system.

Trade with the country will come to a complete standstill, says Uwe Fröhlich, co-head of DZ Bank.

"Because there are virtually no more payment methods that are available." Many Russians worried about their savings, which reportedly led to queues in front of ATMs in Russia.

Also because the ruble dropped significantly at times.

During the Ukraine conflict, the US dollar had temporarily risen by almost 42 percent to a record high of 119 rubles.

On February 23, a day before Russia invaded Ukraine, one dollar was still 80 rubles.

Currently (4 April) the exchange rate is 83 rubles for one US dollar.

However, according to Elina Ribakova, an economist at the Institute of International Finance, the expulsion from the Swift system, combined with other sanctions, in the long term could result in the Russian economy shrinking by 10 percent, according to news channel

.

Some people in Russia also notice in everyday life that Paypal no longer offers its services in Russia: "The Paypal system, with which many students have transferred money to me for the lessons, no longer works in Russia," said a language tutor named Natalia, who offers her services abroad via the Internet, told

After the atrocities in Bucha became known, the US and the EU announced further sanctions against Russia on Monday.