Surging costs catch global economy in perfect storm

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Consumers are starting to feel the effects from surging costs coursing through the global economy.

With coronavirus restrictions being lifted, the rebound impact has exposed supply chain shortages, with many companies scrambling for workers, ships and fuel to power factories, which jeopardise the economic recovery.

Britain’s biggest chicken producer, Ranjit Singh Boparan, owner of the 2 Sisters Group, said that the country’s 20-year cheap food binge is coming to an end and food price inflation could hit double digits.

We are also seeing shortages of warehouse workers, truckers and butchers around Britain, as the economy deals with Brexit and the effects of the pandemic, which has added additional strain felt by many international businesses.

According to Reuters, “IKEA is leasing more ships, buying containers and re-routing goods as the world’s largest furniture brand seeks to mitigate a “perfect storm” of disruptions.”

Jon Abrahamsson, chief executive at Inter IKEA, spoke to Reuters to say he expects the crisis to extend into 2022, with the biggest task getting goods out of China, where 25% of IKEA products are produced. North America have been the worst hit region for IKEA, due to product shortages, closely followed by Europe.

U.S. President Joe Biden urged the private sector this week to help ease blockages that are threatening to disrupt the U.S. holiday season.

Reuters go on to say that “Biden said the Port of Los Angeles would join the Port of Long Beach in working round-the-clock to unload about 500,000 containers, while big corporations such as Walmart and Target expanded their overnight operations to help ease the crisis.”

Even in Japan, where weak growth has not caused prices or wages to rise in recent decades, is starting to now see consumers and businesses facing a price shock for basic consumer products such as coffee and beef bowls.

Euro zone inflation is expected to hit 4% before the end of 2021, twice the ECB’s target, and a growing number of economists believe it will remain above target throughout 2022.

Source: Reuters

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