Global economy caught in perfect storm

LONDON/TOKYO: From beef bowls in Tokyo to fried chicken in London, consumers are beginning to feel the pinch from the surge in costs washing over the global economy.

The rebound in economic activity as coronavirus restrictions are eased has exposed shortages across supply chains, with companies scrambling to find workers, ships and even fuel to power factories, threatening the recovery.

Britain’s biggest chicken producer warned that the country’s 20-year cheap food binge is coming to an end and said food price inflation could hit double digits.

“The days when you could feed a family of four with a 3 pound ($4) chicken are coming to an end,” Ranjit Singh Boparan, owner of the 2 Sisters Group, said.

An acute shortage of warehouse workers, truckers and butchers as the world’s fifth-largest economy deals with Brexit as well as Covid-19 is exacerbating global strains.

Even in Japan, where weak growth has meant that prices of many things - as well as wages haven’t risen much in decades, consumers and businesses are facing a price shock for basics such as coffee and beef bowls.

Japan’s core consumer inflation only stopped falling in August, snapping a 12-month deflationary spell. Economists and policymakers expect to see the recent price rises reflected in official data in the coming months.

With central bankers around the world on high alert and inflation in Spain, Ireland and Sweden hitting 13-year highs, European Central Bank President Christine Lagarde repeated that the upswing in Europe is seen as temporary and said there were no signs that the recent surge is becoming embedded in wages.

“The impact of these factors should fade out ... in the course of next year, dampening annual inflation,” Lagarde said.

Euro zone inflation is expected to hit 4 per cent before the end of the year, twice the ECB’S target, and a growing number of economists see it remaining above target throughout 2022.

In the United States, President Joe Biden on Wednesday urged the private sector to help ease supply chain blockages that are threatening to disrupt the US holiday season.

Biden said the Port of Los Angeles would join the Port of Long Beach in working roundthe-clock to unload about 500,000 containers waiting offshore, while Walmart, Target and other big retailers would expand overnight operations to help meet delivery needs.