Inflation in advanced economies could hit its highest level in decades as supply chains suffer from the conflict between Russia and Ukraine

2022-06-18 0 By

Since the outbreak of the Russia-Ukraine conflict, the global supply chain has been hit by a huge shock.Prices are rising in many countries, with inflation in advanced economies such as the US and UK at its highest level in decades.Carsten Taucke, a member of the executive board of the German Wholesale and Foreign Trade Association (BGA), said Monday he was concerned that the EU’s ban on Russian coal imports would further push up energy prices and affect consumers, Frankfurter Allgemeine Zeitung reported Wednesday.”It’s going to be very expensive.”Even if the federal government announces tax cuts, small and medium-sized Businesses in Germany will struggle to cope with higher diesel prices, he said.Manpower is also at risk: “Many of Germany’s truck drivers are from Russia and Ukraine, and there is a shortfall of 60,000 to 80,000 drivers.””The closure of most civilian airspace over Russia and Ukraine and the bypassing of Russia on some rail routes between Asia and Europe mean that logistics costs will continue to rise.”According to Heng Swee Keat, Singapore’s deputy prime minister, the price of shipping containers globally alone “quadrupled” last year compared to the pre-covid-19 period, while more than 80 per cent of international cargo is transported by sea.”Continued high freight rates will put pressure on trade, which in turn will affect the lifeblood of the global economy,” he warned.Ukraine’s international seaborn trade has been cut off and not a single large container ship has docked at Odessa, the country’s most important port on the Black Sea, since the outbreak of the conflict, according to the Kiel Institute for The World Economy.Western sanctions against Russia are also having an impact, said Starmer, the institute’s economist. “The Russian population is facing an increasingly tight supply of goods,” he said.At Russia’s three biggest ports — St. Petersburg, Vladivostok and Novorossiysk — container volumes have halved, he said.Since 2020, the world’s supply chains have been disrupted by the pandemic and the prices of commodities, food and consumer goods have risen sharply.Agustin Carstens, president of the Bank for International Settlements, warned yesterday that the global economy could be on the brink of a new era of inflation, with consumers facing continued price rises and higher interest rates as globalisation falters.