Global economy caught in perfect storm as prices soar
Food inflation may hit double digits while energy crisis threatens financial recovery
LONDON/TOKYO From beef bowls in Tokyo to chicken fillet rolls in London, consumers are beginning to feel the pinch from the surge in costs washing over the global economy.
The rebound in economic activity from coronavirus restrictions has exposed shortages across the supply chain with companies scrambling to find workers, ships and even fuel to power factories, threatening a nascent recovery.
Britain's biggest chicken producer warned that the country's 20-year binge on cheap food is coming to an end and food price inflation could hit double digits due to the tidal wave of costs.
As it emerges from Brexit and Covid, the world's fifth largest economy faces an acute shortage of warehouse workers, truckers and butchers, exacerbating global supply chain strains.
"The days when you could feed a family of four with a £3 (S$5.50) chicken are coming to an end," Mr Ranjit Singh Boparan, owner of the 2 Sisters Group, said in a statement yesterday.
Even in Japan, where weak growth has meant that prices of many things - including wages - have not risen much in decades, consumers and businesses are facing a price shock for basics such as coffee and beef bowls.
Japan's core consumer inflation stopped falling only in August, snapping a 12-month deflationary spell. Economists and policymakers expect to see the recent price rises reflected in official data in the coming months.
In the United States, President Joe Biden urged the private sector to help ease supply chain blockages that are threatening to disrupt the US holiday season.
Mr Biden said the Port of Los Angeles would join the Port of Long Beach in expanding round-the-clock operations to unload an estimated 500,000 containers waiting offshore, while Walmart Target and other big retailers would expand their overnight operations to try to meet delivery needs.
With winter approaching in some parts of the world, the prospects look bleak as power supplies dwindle.
As cold weather swept across northern China, coal prices held near record highs, with power plants stocking up on fuel to ease an energy crunch that is fuelling unprecedented factory gate inflation in the world's second-largest economy.
The International Energy Agency said the energy crunch is expected to boost oil demand by half a million barrels each day and could stoke inflation and slow the world's recovery from the Covid-19 pandemic.
Some companies, such as Toyota Motor, are intensifying efforts to restart production, with the Japanese carmaker hoping to do so in December with a rebound in shipments from pandemic-hit suppliers, three sources told Reuters. - REUTERS