‘There will be costs’: Josh Frydenberg warns of higher cost of living amid Ukrainian invasion

Treasurer Josh Frydenberg has warned Australians will face higher living costs from standing up to bullies like Russia.

Australians must be “willing to pay” a higher cost of living in order to stand up to bullies, defend our values and live free of coercion and fear, Treasurer Josh Frydenberg says.

As the invasion of Ukraine draws on, the West’s swift punishment of Russia by enforcing sanctions has left President Vladimir Putin staring down a “bleak” economic future.

While Mr Frydenberg and Prime Minister Scott Morrison have pointed out how little trade Australia does do with Russia, sanctions against Russian individuals, banks and key industries, as well as longer term measures like supply chain safeguarding will cost Australians.

“The message to Russia and (other aggressive autocracies) is clear, there will be swift and significant economic costs imposed on those countries that choose to violate our fundamental international rules and norms,” Mr Frydenberg told a gala dinner on Wednesday.

Treasurer Josh Frydenberg says strong actions against Russia will cost Australians, but it’s a price we must be willing to pay. Picture: NCA NewsWire / Gary Ramage

“But we must not be naive about the costs these necessary actions will impose on the West.

“These costs will flow initially in the form of higher commodity prices, and in turn higher inflation.”

Mr Frydenberg said Australians would continue feel the pinch at the bowser, noting global oil prices had risen by more than a third since the invasion began.

Average fuel prices are around $2 a litre across the country.

The treasurer said European gas prices had nearly tripled and thermal coal prices almost doubled.

“As Putin seeks to weaponise Europe’s energy dependency on Russia, it will undoubtedly test the West’s pain threshold,” Mr Frydenberg said.

“And while Australia is better placed than most to withstand these pressures, there will be costs borne by Australians in defending our values.

“For liberal and free nations, this is a price that we must be willing to pay for the right to live free of fear and coercion.”

Petrol prices continue to rise across Australia and the world after Russia’s invasion of Ukraine. Picture: Ian Currie.

Mr Frydenberg said governments and businesses must “price in this new risk” as they seek to strengthen and realign critical supply chains.

“No country or business can allow itself to be held to ransom or leave their supply chains to chance,” he said.

“Governments and businesses must … seek out reliable and trusted partners to build more diversified and robust supply chains. This is a rational economic response to the risks we now face.”

Mr Frydenberg added that Australia would invest in enhancing Australia’s defence capability, ahead of the Prime Minister’s announcement on Thursday that the government would invest $38b to increase the Australian Defence Force by at least 18,000 personnel.