Some shortages of goods have eased in recent months as companies build up additional stocks in warehouses and warehouses. But the disruptions plaguing supply chains, as well as price pressures around the world, continue to show signs of deteriorating, suggesting that American consumers may see more shortages in products such as electronics – and possibly higher prices – in the coming months.
In particular, the sweeping shutdowns in China to try to eradicate the Omicron variant of the coronavirus have been posing new risks to America’s supply of manufacturing components and finished goods. Although China has tried to keep its ports operating during the pandemic, restrictions on truck drivers have halted the flow of electronics, auto parts and other goods out of the country.
In a note last week, Ariane Curtis, global economist at Capital Economics, said that in developed markets, “renewed shortages — especially in electrical goods — and higher freight costs could keep commodity inflation higher for longer than we currently expect.”
She said the company expected inflation in advanced economies to be moderate during the year, but the war in Ukraine had affected European supply chains, while the shutdown in China risks further product shortages in the United States.
Shipping rates have fallen slightly in recent weeks, but are still much higher than they were before the pandemic. Shipping a 40-foot container from China to the US West Coast was $15,817 as of Friday, up from $5,893 a year ago and $1,584 at the same time in 2019, according to data from Freightos, a shipping company. – tracking company.
It’s impossible to accurately predict the extent to which China’s shutdowns will continue to disrupt global supply chains and thus their inflationary impact, said Amir Sharif, head of research firm Inflation Insights. But he said companies have made progress recently in building up stocks that came under heavy pressure earlier in the pandemic, and those excess goods will help mitigate the inflationary impact.
Sheriff said consumers also appear to be cutting back on their spending on goods, possibly to offset higher food and gasoline prices.
“People are holding back because of inflation and price hikes in other places, so things are starting to pile up a little bit in warehouses,” he said. “With stocks, we’re definitely in a better position to handle the slowdown without much impact on inflation.”
Phil Levy, chief economist at Flexport, a logistics company, said there is a “tremendous concern within the logistics industry that companies are overrun on orders, piling up excess inventory” and are pulling out.
But inflation expectations are complicated, he said, given that international shipping lanes remain congested at the same time and Chinese shutdowns appear likely to cause further disruptions to the flow of goods. Much of what happens with inflation this year will depend on consumer demand trends.
“The crystal ball is extraordinarily mysterious at the moment,” said Mr. Levy.