To make matters worse, and due to the lag effect, the real impact of inflation has yet to be felt. Thus, central banks are likely to turn to their tried and tested tool: Raising interest rates.
There is a new wry joke within the shipping industry. With shipping rates spiking up more than seven times this past year or so — and still climbing — there is a good chance the value of the cargo in each container is lower than the shipping cost. A standard container from Shanghai to Europe cost some US$2,000 ($2,706) before the pandemic. It now costs US$15,000 to move the same box the same distance.
Coupled with higher (or in some cases, record) prices of everything ranging from soft commodities to gold to coal, oil and palm oil, there is a very real worry that inflation will follow suit, thereby piling on the cost pressures, hurting profitability for manufacturers and businesses in general.
