At the Wall Street Journal, "The global supply chain is slow, but the economic fallout from the invasion of Ukraine is swiftly raising prices for producers and consumers world-wide":
Russia’s invasion of Ukraine has set the stage for faster-rising consumer prices, with the mayhem of war driving up manufacturing costs for food, consumer goods and machinery in places far from the battlefield. The conflict is stressing an already strained global supply chain, and its economic impact will likely be felt in households world-wide, at supermarkets, retailers and the gas pump. While higher costs will take time to work their way from producers to consumers, executives and analysts expect the war’s fallout to worsen inflation already stoked by shortages of goods and workers. “It seems to be overshadowing everything now and reversing the improvement that we were seeing,” said Kathy Bostjancic, chief U.S. economist at Oxford Economics. The short-term consequences have been serious. Grain markets recently hit a 14-year high in anticipation of a diminished harvest in Ukraine, which would raise costs to feed the world’s cattle and poultry. Aluminum prices rose in anticipation of sanctions on Russia, a major supplier of the metal used in soda cans, aircraft and construction, as well as on fears that Moscow could halt exports. Crude oil prices rose 25% last week, to more than $118 a barrel, the highest level since 2013. Gas prices have gone up an average of 43.7 cents a gallon in the U.S., according to data from price tracker GasBuddy. On Sunday, the national average was $4.02 a gallon, according to GasBuddy. On Friday, Russia, one of the world’s largest suppliers of fertilizers such as potash and nitrogen, said it could suspend exports. Farmers and consumers will bear the cost of any prolonged shortage. Ingka Group, which owns and operates furniture giant IKEA’s stores, said Thursday that prices would rise more than expected this year after it warned the war in Ukraine was causing serious supply chain disruptions. IKEA said its global prices would rise about 12%, up from earlier estimates of 9%. Some analysts and company officials caution that it is too early to know exactly what the long-term effects of the war will have on the global economy, and not all think the conflict in Ukraine will have a major impact on supply chains. Businesses have rebounded from global conflicts in the past and can mitigate the effects by finding alternative suppliers elsewhere. But the invasion of Ukraine has already slowed the journey of goods traveling by various means. Many Western shipping companies are steering clear of Russian ports, an important Asia-to-Europe rail line is used less, much of the Black Sea remains out of bounds and many air cargo flights are either banned from or are avoiding Russian airspace, a key route for goods moving between Europe and Asia. Shipping and airfreight rates have moved higher. Rising energy and food prices are only the most obvious pressure points for consumers. “Now that we are seeing increases across other commodities, like aluminum, palladium, copper,” Ms. Bostjancic said, “that is going to feed through to some degree to consumer prices as well.” Ukraine industries, including car-part manufacturers, breweries and an alumina refinery, have halted production. A giant steel mill owned by ArcelorMittal SA, one of the country’s largest industrial enterprises, closed Thursday. That and other plant closures in the country, along with Russia’s difficulty in getting some of its steel out, are expected to accelerate already rising steel prices...
Still more.
No comments:
Post a Comment