Goods inflation softens as global supply chain pressures ease: Fitch

16 Aug '22

2 min read

Pic: Shutterstock

Core goods price inflation, excluding energy, is expected to slow in the near future due to easing supply chain pressures, according to global agency Fitch Ratings, which recently said in a report that global supply chain disruptions are softening because of falling shipping rates, a slowdown in consumer durable spending, clearing of order backlogs and easing of queues at ports.

Logjams in global consumer goods supply and trade over the past 18 months saw increasing bottlenecks in ports, a shortage of staff to offload and transport freight, a shortage of semiconductors and congestion in global shipping, it said.

Shipping rates increased ten-fold and journey times doubled, contributing to a surge in core goods (excluding energy) price inflation. These pressures persisted well into the first half of 2022 but supply-chain disruptions look to have eased in the past couple of months.

The time it takes to ship goods freight has eased to around 95 days (on the China to the US west coast, or the trans-Pacific eastbound, route) from a peak of 113 days at the start of the year.

Concerns over supply chain pressures will continue due to China's zero COVID-19 policy, while gas rationing in Europe may impair industrial supply chains, it pointed out.

Nevertheless, recent improvements in global supply chain pressures are encouraging, Fitch Ratings noted.

ALCHEMPro News Desk (DS)

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