global economy caught in a perfect storm, Auto News, ET Auto
By Guy Faulconbridge, Andrew MacAskill, Daniel Leussink and Leika Kihara
LONDON / TOKYO, – From beef bowls in Tokyo to fried chicken in London, consumers are starting to feel the effects of soaring costs spilling over to the global economy.
The rebound as restrictions on coronaviruses are relaxed has exposed shortages in the supply chain, as companies scramble to find workers, ships and even fuel to power factories, threatening the nascent economic recovery.
Britain’s biggest chicken producer has said the cheap food frenzy that had lasted 20 years in the country is coming to an end and food price inflation could reach double digits.
âThe days when you could feed a family of four with a 3-pound ($ 4) chicken are coming to an end,â said Ranjit Singh Boparan, owner of 2 Sisters.
The shortage of warehouse workers, truckers and butchers as the world’s fifth-largest economy deals with Brexit as well as COVID is exacerbating the tensions felt globally by international businesses.
IKEA rents more ships, buys containers and reroutes goods as the world’s largest furniture brand seeks to mitigate a “perfect storm” of disruption.
Jon Abrahamsson, managing director of Inter IKEA, told Reuters that IKEA warns that supply chain disruptions are expected to last until 2022, he expects the crisis to continue until 2022, the biggest challenge is getting the goods out of China, where about a quarter of IKEA products are made.
IKEA said stores in North America were hit hardest by product shortages, followed by Europe.
In the United States, President Joe Biden urged on Wednesday https://www.reuters.com/world/us/biden-cite-progress-unsnarling-supply-chain-meeting-with-labor-industry-2021-10- 13 the private sector to help remove the bottlenecks that threaten to disrupt the holiday season in the United States.
Biden said the Port of Los Angeles would join the Port of Long Beach to work around the clock to unload around 500,000 containers, while Walmart, Target and other large retailers would expand their nighttime operations to help.
Even in Japan, where weak growth has meant that the prices of many things – as well as wages – haven’t risen much in decades, consumers and businesses are facing a price shock from commodities such as coffee and beef bowls.
Core consumer inflation in Japan stopped falling in August, ending a 12-month deflationary period. Economists and policymakers expect recent price hikes to be reflected in the data over the coming months.
As central bankers are on high alert and inflation in Spain, Ireland and Sweden peaks in 13 years, European Central Bank President Christine Lagarde reiterated that the recovery in Europe was considered temporary and said there was no sign it is taking root in wages.
“The impact of these factors is expected to fade (…) over the next year, dampening annual inflation,” Lagarde said.
Eurozone inflation is expected to hit 4% by year-end, double the ECB’s target, and a growing number of economists see it staying above target throughout from 2022.
Declining power supplies portend bleak winter prospects in some parts of the world.
As northern China cools, coal prices have hit record highs as power plants stock up to alleviate an energy crisis that has pushed exit inflation from factories in the world’s second-largest economy to a low. peak of at least 25 years in September.
Meanwhile, Coal India, the world’s largest coal miner, has said it has temporarily stopped supplying non-electric users as India struggles with one of its worst electricity supply deficits.
China’s energy crisis, caused by coal shortages, high fuel prices and booming post-pandemic industrial demand, has halted production, including at factories supplying big brands such as Apple.
However, weak demand limits consumption inflation, forcing policymakers to walk a tightrope between supporting the economy and increasing producer prices.
There are few signs of a rest in energy costs, with Brent crude oil futures above $ 84 a barrel on expectations that the surge in natural gas prices will cause a switch to oil for meet heating needs in winter.
The International Energy Agency has said the crisis could increase demand for oil by half a million barrels per day (bpd).
“The rise in energy prices is also adding to inflationary pressures which, together with the power outages, could lead to a decline in industrial activity and a slowdown in economic recovery,” the IEA said in its report. monthly on oil.
Leading economic institutes have cut their joint forecasts for 2021 growth in Germany, Europe’s largest economy, to 2.4% from 3.7%, as supply bottlenecks hamper production.
The German government and industry sources told Reuters on Thursday that the government plans to ease the pressure on consumers from rising energy bills by reducing the surcharge by 43% that helps fund investments in renewable energies next year.
And in Singapore, two energy providers, including one of the largest independents, are exiting the market while at least three others have stopped accepting new customers due to soaring wholesale energy prices. company sources told Reuters.
Meanwhile, the White House has spoken to U.S. oil and gas producers to help cut fuel costs, two sources familiar with the matter said.
The average US retail price of a gallon of gasoline is at its highest in seven years, and winter fuel costs are expected to rise.
Dutch navigation and digital mapping company TomTom has warned that supply chain problems in the automotive sector could last until 2022.
âCollectively, we have underestimated the extent of supply chain problems, and in particular semiconductor shortages, have been or have become,â Taco Titulaer, chief financial officer of TomTom, told Reuters.
A global shortage of semiconductor chips has forced automakers still recovering from the coronavirus to shut down production again.
Italian-American automaker CNH Industrial said on Wednesday it would temporarily shut down several European factories manufacturing agricultural, commercial and powertrain vehicles over component supply issues.
However, the surge in demand is proving to be a boon for some.
Taiwan’s TSMC, the world’s largest contract chip maker, reported a nearly 14% jump in third-quarter profits.
TSMC and Taiwan have become at the heart of efforts to address the global chip shortage, which has also affected manufacturers of smartphones, laptops and consumer devices.
Some companies, such as Toyota Motor Corp, are stepping up efforts to restart production. The Japanese automaker hopes to do so in December with a rebound in shipments from suppliers affected by the pandemic, three sources told Reuters.