Inflation fueled by war adds to Europe’s cost-of-living crisis

Europeans, who are already struggling to make ends meet due to growing living costs, are now facing an even greater blow as the conflict in Ukraine drives up fuel and food prices, threatening to derail a fragile economic recovery.

The rising price of crude oil on global markets has resulted in the largest weekly increase in gasoline prices in several European service stations, bringing costs beyond 2 euros for a litre ($8.25/gallon) of unleaded fuel in some situations.

“The issue is not the price tomorrow, but how much it (gasoline) will cost 15 days from now; we believe it will be significantly higher. I believe we are in for some difficult days “Alejandro Oterino, a 76-year-old Madrid pensioner, stated.

The European Central Bank must alleviate this concern of prices spiralling out of control during its meeting on Thursday. Christine Lagarde, the president of the European Central Bank, will try to show that she can put a lid on euro-area inflation, which had already risen to a higher-than-expected 5.8% before of Russia’s invasion of Ukraine.

“Central banks are under natural pressure to keep (inflation) expectations low through communication, but they risk losing credibility in the process,” said Gunther Schnabl, an economics professor at Leipzig University.

In Portugal, the poorest country in Western Europe, with 10% of the population living on a minimum salary of 705 euros, motorists have been hurrying to fill up their tanks before any more price spikes are implemented. Filling up a diesel automobile with a 50-litre tank costs 91 euros.

“If costs continue to rise, I may have to rely on social services to eat and drink,” said Antonio Dias, a 56-year-old Uber driver in Lisbon.

“It will not make sense to continue undertaking this type of work if this continues,” he said, pressing the government to reduce fuel taxes, which presently account for around half of gasoline end-prices.

Already, knock-on effects are being felt. Teresa Soares, who sells food to restaurants in the Portuguese capital, said she had no other option for making deliveries except to use her automobile, and that she would have to bear the extra cost on her business.