The 24th of February, 2022, marked a turning point in modern history, as Russia started its invasion of Ukraine. The conflict has had massive impacts on a political, social, and economic scale. On the economic side, sanctions have been placed on Russia, greatly limiting its ability to export goods. Since Russia is a big exporter of gas and oil, it has caused a shortage worldwide. What’s more, Russia has also willfully “choked off” fossil fuel supplies to Europe in hopes of spurring an economic crisis on the continent.
Not only has this shortage affected gas and oil prices, but there have also been many supply chain issues and price rises affecting businesses on a global scale. MIT notes that the war has also sparked shortages of wheat, gas, oil from Russia, and electronic parts from China.
The conflict has changed consumer patterns as well. Moreover, during war, governments typically spend more than usual. This includes spending on military arms, housing, food, and wages. The increase in spending usually results in more inflation, causing prices to soar, while wages all-too-often fail to keep pace. As World Economic Forum writes, consumers are now buying in smaller amounts and cutting their overall spending.
These economic effects also touch us locally. Prices are rising in Westchester, with costs for rent, food, and groceries reaching a 40-year high. Naturally, this inflation translates into higher prices among Edgemont businesses, as they try to compensate for the higher costs.
How do these higher prices change consumer habits globally?
A new pattern for spending has appeared, as World Economic Forum writes that European consumers have been increasingly pessimistic about the economy. Moreover, Europeans have noticed the increasing prices of necessities, and due to these factors, they have started to cut back on or delay the purchase of non-essential items. European consumers have also started switching to cheaper alternatives to save money.
How have consumer patterns changed in Edgemont?
Some of the consumer patterns witnessed in Europe can be seen in Edgemont as well. A survey conducted of Edgemont residents has found that a majority of residents have noticed rising prices. And while the spending of most households has remained the same, the amount spent at each store visit has decreased. Prior to the inflation, a majority of residents spent $20-40, whereas after, a majority only spent $10-20 per visit. This decline in consumer spending is consistent with how many goods and services are purchased each month.
What will happen in the future?
With the uncertainty of the Ukraine War, it is hard to say for certain what the future brings. The U.S. economy has declined 0.9% over the last three months, according to NPR. And with rumors of a recession coming, it’s likely that the decrease in consumption, worldwide and locally, will continue.
