- British chicken king says 20 years of cheap food is over
- IEA says energy crisis could threaten economic recovery
- Cold keeps coal prices high in China, power outage continues
- Biden targets bottlenecks threatening vacation sales
LONDON/TOKYO, Oct. 14 (Reuters) – From beef bowls in Tokyo to chicken breast rolls in London, consumers are beginning to feel the pinch of rising costs flooding the global economy.
The recovery in economic activity from the coronavirus restrictions has exposed shortages across the supply chain, with companies struggling to find workers, ships and even fuel to power factories, threatening a nascent recovery.
Britain’s largest chicken producer warned that the country’s 20-year binge on cheap food is coming to an end and food price inflation could reach double digits due to the cost tidal wave.
As illustrated by Brexit and COVID, the world’s fifth largest economy is facing an acute shortage of warehouse workers, truck drivers and butchers, escalating global supply chain tensions.
“The days when you could feed a family of four with a 3-pound ($4) chicken is coming to an end,” Ranjit Singh Boparan, owner of the 2 Sisters Group, said in a statement on Thursday.
Even in Japan, where sluggish growth has meant that prices of many things — including wages — haven’t risen much in decades, consumers and businesses are facing a price shock for commodities like coffee and beef bowls.
Japan’s core consumer inflation did not stop falling until August, breaking a 12-month deflationary period. Economists and policymakers expect to see recent price increases reflected in official data in the coming months.
In the United States, President Joe Biden on Wednesday urged the private sector to help ease supply chain blockages that threaten to disrupt U.S. holidays.
Biden said the Port of Los Angeles would join the Port of Long Beach in expanding its 24-hour operations to unload an estimated 500,000 containers offshore, while Walmart (WMT.N), Target (TGT.N) and other major retailers would. expanding their nighttime operations to try to meet supply needs.
With winter approaching in some parts of the world, the outlook looks bleak as power supplies dwindle.
As the cold weather swept through northern China, coal prices remained close to record highs, with power plants replenishing fuel to alleviate an energy crisis fueling unprecedented factory inflation in the world’s second-largest economy.
China’s deepening power crisis, caused by coal shortages, high fuel prices and booming industrial demand after the pandemic, has halted production at numerous factories, including many supplying major global brands such as Apple Inc (AAPL.O).
Rising energy prices propelled China’s factory gate inflation to its highest level in at least 25 years in September, with the PPI rising 10.7% year-over-year, data shows.
But weak demand capped consumer inflation and forced policymakers to walk a tightrope between supporting the economy and pushing producer prices further.
So far, there is little sign of any improvement in energy costs, with oil prices rising again Thursday on a larger-than-expected pull in US gasoline and distillate supplies.
The rise was also supported by expectations that rising natural gas prices as winter approaches will cause a switch to oil to meet heating demand, with Brent oil futures reaching $83.85 a barrel at 0647 GMT.
The International Energy Agency (IEA) said the energy crisis is expected to boost oil demand by half a million barrels per day (bpd) and could fuel inflation and help the world recover from the COVID-19 pandemic. to slow down.
“Higher energy prices are also adding to inflationary pressures which, along with power outages, could lead to lower industrial activity and a slowdown in the economic recovery,” the Paris-based agency said in its monthly oil report.
In Germany, the country’s main economic institutions have lowered their combined forecast for 2021 growth in Europe’s largest economy from 3.7% to 2.4% in 2021, as supply bottlenecks hamper production, telling a story. of Reuters confirms.
In response to the growing energy price crisis, the White House has been in talks with US oil and gas producers in recent days about helping to reduce rising fuel costs, two sources familiar with the matter told Reuters.
In the United States, the average selling price of a gallon of gas is at its highest level in seven years, and fuel costs are expected to rise in the winter, according to the U.S. Department of Energy. Oil and gas production remains below the country’s peak reached in 2019.
Dutch navigation and digital mapping company TomTom (TOM2.AS) warned that automotive supply chain problems could persist into the first half of 2022 after it reported a larger-than-expected quarterly loss.
Auto production has been hit by a global shortage of semiconductor chips, forcing automakers still recovering from the disruptions caused by the coronavirus to halt production again.
“Together we underestimated how great the supply chain problems, and especially for semiconductor shortages, are or have become,” TomTom’s Chief Financial Officer Taco Titulaer told Reuters on Thursday.
The rising demand is a boon for some companies. Taiwan’s TSMC (2330.TW), the world’s largest contract chipmaker, reported a nearly 14% increase in profits in the third quarter.
TSMC and Taiwan in general have also become central to efforts to solve the pandemic-induced global chip shortage that has hurt smartphones, laptops and consumer equipment manufacturers as well as automakers.
Some companies, such as Toyota Motor Corp (7203.T) are stepping up their efforts to restart production, and the Japanese automaker hopes to do so in December with an uptick in shipments from suppliers hit by the pandemic, three said. sources to Reuters.
Toyota has asked suppliers to make up for lost production so it can build an additional 97,000 vehicles between December and the end of March, with some considering running additional weekend shifts, the sources said.
In the UK, the owner of discount chain Poundland warned that pressure on global supply chains has increased with reduced availability of raw materials, leading to commodity inflation.
Pepco Group said this was exacerbated by limited container capacity, which caused shipping costs to rise significantly from the last quarter.
But in rare good news for consumers, Pepco said it won’t pass on most of the higher costs.
Additional reporting by Muyu Xu, Shivani Singh, David Stanway, Noah Browning, James Davey, Liangping Gao, Stella Qiu and Ryan Woo; Writing by Alexander Smith; Editing by Carmel Crimmins
Our Standards: The Thomson Reuters Trust Principles.