R&I – FS
From buying groceries to heating our homes, the cost of living is rising sharply around the world. Global inflation – the rate at which prices rise – is at its highest since 2008. Here are some of the reasons why:
1. Rising energy and petrol prices
Oil prices slumped at the start of the pandemic, but demand has rocketed back since, and this week they hit a seven-year high. In the US gasoline currently costs an average of $3.31 a gallon – up from $2.385 a gallon a year ago. It’s a similar story in the UK and the EU.
2. Goods shortages
Consumers stuck at home during lockdown last year splashed out on household goods and home improvements because they couldn’t go to restaurants or on holiday. Manufacturers in places such as Asia – many of which faced shutdowns due to Covid restrictions – have struggled to keep up with demand since then. It’s led to shortages of materials such as plastic, concrete and steel, driving up prices. Timber cost as much as 80% more than usual in 2021 in the UK and reached more than twice its typical price in the US.
3. Shipping costs
Global shipping companies – which move goods around the world – have been overwhelmed by surging demand after the pandemic. It’s meant retailers have had to pay a lot more to get those goods into stores. As a result, prices have been passed on to consumers. Sending a single 40ft container from Asia to Europe currently costs $17,000 (£12,480) – more than 10 times than the year before, when it was $1,500 (£1,101). It’s been accompanied by a rise in air freight fees and made worse by a truck driver shortages.
4. Rising wages
Many people quit the workforce or changed jobs during the pandemic. In the US, April saw more than four million people quit their jobs, according to the Department of Labor – the biggest spike on record. As a result, firms are having problems recruiting staff such as drivers, food processors and restaurant waiters. A survey of 50 major US retailers by research firm Korn Ferry found that 94% were having trouble filling empty roles.
5. Climate impact
Extreme weather in many parts of the world has contributed to inflation. Global oil supplies took a hit from hurricanes Ida and Nicholas passing through the Gulf of Mexico and damaging US oil infrastructure. And problems meeting the demand for microchips were worsened after a fierce winter storm closed major factories in Texas last year.
Rawr
Article URL : https://www.bbc.co.uk/news/business-59982702