A perfect storm of catastrophic financial pressures is brewing in Australia even before war breaks out with Russia over Ukraine.
The tense military situation might be half a world away, but the impact will still be felt Down Under with fuel prices hitting record highs, grocery bills soaring, and the stock market falling.
Inflation could surge on the back of the increasing household bills, which will then spark interest rate rises and inflict even more misery on Australian families with higher mortgage repayments.
And that's before a single shot is fired on the Russia-Ukraine border.
Petrol prices have already more than doubled in Australia since April 2020 and the NRMA warned there would be even more pain at the petrol bowser if war is declared.
A perfect storm of catastrophic financial pressures is brewing in Australia even before war breaks out with Russia over Ukraine (pictured, Russian tanks near the Ukraine border)
Petrol prices (pictured) have already more than doubled in Australia since April 2020 - and the NRMA is warning there will be even more pain at the petrol bowser if war is declared
Average fuel prices have gone up 108 per cent since the Covid pandemic first put the world into lockdown, sending fuel prices tumbling as demand disappeared.
But unleaded prices bounced back and broke the $2 a litre mark at some Sydney service stations this week, while the average price in Perth hit an Australian high of $1.95 a litre.
Even if war doesn't break out in Ukraine, crippling trade sanctions against Russia could still see prices rise even higher.
OPEC has already throttled oil production to artificially force prices higher after two years of over-supply, sending the cost of crude oil to around $100 a barrel, and tipped to rise even further.
As the imminent threat of war with Russia has increased, so has the cost of fuel. Petrol prices in Sydney have soared more than 30c a litre since the start of the year (pictured, ACCC graph)
Average fuel prices have gone up 108 per cent since the Covid pandemic first put the world into lockdown, sending fuel prices tumbling as demand disappeared
'There's an expectation that will now worsen as a result of the sanctions that are about to be placed on Russia,' NRMA's Peter Khoury warned.
'Russia is of course one of the world's largest oil-producing countries, and oil-producing countries have put an artificial lid on production levels.
'Demand for oil has continued to increase as the world economy started to open up again, but supply has not kept up.
'So those two factors combined have led to Australians paying the highest prices they've ever paid for petrol and diesel.'
As the imminent threat of war with Russia increased, so has the cost of fuel. Petrol prices in Sydney have soared more than 30c a litre since the start of the year.
'There will need to be an increase in supply otherwise, we're going to continue to see these prices spiral out of control,' Mr Khoury said. 'There is no good news.'
The soaring price of fuel is also impacting prices on supermarket shelves, which were already seeing price rise pressures even before the threat of war and sanctions
The soaring price of fuel is also impacting prices on supermarket shelves, which were already seeing price rise pressures even before the threat of war and sanctions.
'The Australian economy runs on diesel. The impact is going to be significant,' Mr Khoury warned.
'Diesel prices are also at record highs and diesel is now more expensive than petrol.
'Any industry that relies on delivering goods and services is dramatically impacted by these record high prices - not just trucks and distribution but also farming and agriculture.
'This is a major burden on their bottom line, and that has far reaching implications for the economy. Inevitably these costs gets passed on to the consumers.'
