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Price pinch: world economy caught in a perfect storm

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LONDON / TOKYO – From Meat Bowls https://www.reuters.com/world/the-great-reboot/beef-bowls-coffee-cost-surge-squeezes-japans-salaryman-staples-2021-10-14 in Tokyo fried chicken https://www.reuters.com/world/uk/britains-binge-cheap-food-is-over-biggest-chicken-producer-says-2021-10-14 in London, consumers are starting to feel the pinch of rising costs sweeping the world economy.

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

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

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

An acute shortage of warehouse workers, truckers and butchers as the world’s fifth-largest economy grapples with Brexit and COVID-19 is exacerbating global tensions.

Even in Japan, where weak growth has meant that the prices of many things, as well as wages, haven’t risen much in decades, consumers and businesses face a price shock for staples like coffee and mugs. of meat.

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

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With central banks around the world on high alert and inflation in Spain, Ireland and Sweden hitting 13-year highs, the president of the European Central Bank, Christine Lagarde, repeated that the rebound in Europe is considered temporary and said there was no signs that the recent increase is to be incorporated into wages.

“The impact of these factors should wear off … over the course of the next year, moderating annual inflation,” Lagarde said.

Eurozone inflation is expected to reach 4% before the end of the year, double the ECB’s target, and a growing number of economists forecast that it will remain above the target through 2022.

In the United States, President Joe Biden on Wednesday urged https://www.reuters.com/world/us/biden-cite-progress-unsnarling-supply-chain-meeting-with-labor-industry-2021-10 -13 the private sector to help ease supply chain blockages that threaten to disrupt the U.S. holiday season.

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Biden said the Port of Los Angeles would join the Port of Long Beach in working 24 hours a day to unload about 500,000 containers waiting offshore, while Walmart, Target and other large retailers would expand night operations to help meet delivery needs.

COLD FRONT

Dwindling power supplies suggest a bleak winter outlook in some parts of the world.

As northern China cools, coal prices stayed near record highs, and power plants were fueled to ease an energy crisis that sent inflation in factories in the world’s second-largest economy. to a maximum of at least 25 years in September.

The energy crisis, caused by coal shortages, high fuel prices and booming post-pandemic industrial demand, has halted production at numerous Chinese factories, including many that supply major global brands such as Apple Inc.

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However, weak demand is limiting consumer inflation, forcing policy makers to walk a tightrope between supporting the economy and rising producer prices.

There is little sign of an easing in energy costs, with Brent crude futures above $ 84 a barrel on Thursday, as expectations that high natural gas prices will prompt a shift to oil to meet the Winter heating needs drove demand.

The International Energy Agency said the energy crisis could boost oil demand by half a million barrels per day (bpd).

“Higher energy prices also add to inflationary pressures which, along with power outages, could lead to lower industrial activity and a slowdown in economic recovery,” the IEA said in its monthly oil report.

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Major economic institutes cut their joint forecast for 2021 growth in Germany, Europe’s largest economy, to 2.4% from 3.7% as supply bottlenecks hamper production, a Reuters story confirms. https://www.reuters.com/business/german-economic-institutes -cut-2021-growth-forecast-24-sources-2021-10-13 / #: ~: text = BERLIN% 2C% 20Oct% 2013% 20 (Reuters), with% 20the% 20decision% 20told% 20Reuters.

In response to the crisis, the White House has been speaking with US oil and gas producers to help reduce fuel costs, two sources familiar with the matter told Reuters.

The average US retail cost of a gallon of gasoline is at a seven-year high, and the US Department of Energy expects fuel costs to rise in winter. Oil and gas production remains below the national peak reached in 2019.

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POTATOES STILL SMALL

Dutch digital mapping and navigation company TomTom, which reported a larger-than-expected quarterly core loss, warned that supply chain problems in the automotive sector could last into the first half of 2022.

The global shortage of semiconductor chips has forced automakers still reeling from coronavirus disruptions to halt production again.

Italian-American vehicle maker CNH Industrial NV said Wednesday it will temporarily shut down several European agricultural, commercial vehicle and powertrain manufacturing plants due to difficulties in sourcing components.

“Collectively, we have underestimated the magnitude of supply chain problems, and especially semiconductor shortages, have been or have become,” TomTom CFO Taco Titulaer told Reuters.

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Yet rising demand is a boon for some: Taiwan’s TSMC, the world’s largest contract chip maker, reported a nearly 14% increase in third-quarter earnings.

TSMC and Taiwan have become the center of efforts to solve the global shortage of chips, which has also affected manufacturers of smartphones, laptops and home appliances.

Some companies, like Toyota Motor Corp, are stepping up their efforts to restart production. The Japanese automaker expects to do so in December with a rebound in shipments from suppliers affected by the pandemic, three sources told Reuters.

They said Toyota had asked suppliers to make up for lost production so it could build an additional 97,000 vehicles between December and March, possibly by adding weekend shifts.

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In Britain, the owner of discount retailer Poundland warned that pressure on global supply chains has increased, with lower availability of raw materials leading to raw material price inflation.

Pepco Group said that had been compounded by limited container capacity, which significantly increased shipping costs.

But in rare good news for consumers, Pepco said it won’t pass on most of the higher costs.

(Additional reporting by Muyu Xu, Shivani Singh, David Stanway, Noah Browning, James Davey, Liangping Gao, Stella Qiu, and Ryan Woo; written by Alexander Smith; edited by Carmel Crimmins and Catherine Evans)

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