More than half of Americans need a stimulus of $ 1,400 to pay for their basic expenses

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Inflation risk intensifies with increasing supply shortages

(Bloomberg) – Find out what drives the global economy and what it means for policymakers, businesses, investors and you with The New Economy Daily. Signs of inflation are accelerating, with a growing number of businesses in contact with consumers warning in recent days that supply shortages and logistics bottlenecks could force them to raise prices. semiconductors, steel, wood and cotton are appearing in survey data, with manufacturers in Europe and the United States this week reporting record arrears and higher input prices as they scramble to replenish stocks and keep up with growing consumer demand. no – is the biggest question for policymakers and markets. Rising prices and the potential for central bank response topped the list of concerns of fund managers surveyed by Bank of America Corp. Many economists and central bankers, from the Federal Reserve to the downside, argue the price gains are temporary and will be held back by forces such as virus concerns and unemployment. Investors remain skeptical, with companies like Nestlé SA and Colgate-Palmolive Co. already announcing that they will have to raise prices. US Treasury Secretary Janet Yellen, former Fed chairman, entered the debate on Tuesday when rocked the markets with the observation that rates will likely rise as government spending increases. She later clarified that she neither foresees nor recommends an increase. The Bloomberg Commodity Spot Index, which tracks 23 commodities, hit its highest level in nearly a decade. This has pushed a gauge of global manufacturing output prices to its highest level since 2009, and US producer prices to levels not seen since 2008, according to data from JPMorgan Chase & Co. and IHS Markit. . JPMorgan analysts also estimate that non-food and energy import prices in the largest economies rose nearly 4% in the first quarter, the highest level in three years. “The risk is clearly on the upside in the current environment,” said John Mothersole, pricing and purchasing manager. research director at IHS Markit. “The surge in commodity prices over the past year now guarantees rising commodity price inflation this summer.” IHS Markit analysis of petroleum, chemicals, steel, copper, zinc, wood, pulp and rubber expects price increases to subside closer to end of the year. Meanwhile, strategists at the Blackrock Investment Institute wrote on Monday that they saw increases in consumer prices in the United States of just under 3% on average from 2025 to 2030, although that pace is “still undervalued by the markets ”. 2022 often hinges on the trillions of dollars pumped into infrastructure projects around the world amid an atmosphere of low interest rates, especially in the U.S. This has accelerated a rally in commodities as major economies collapse. are recovering from the pandemic amid growing signs of shortages in several Some companies have found they could not afford to wait for the “temporary” increases. This means consumers can expect to face higher costs for a range of everyday items, including garbage bags and children’s clothing. “Direct price increases will continue to be an important component as we look into the second half of the year,” Colgate-Palmolive CEO Noel Wallace said at the end of last month, when the company announced its earnings. “I anticipate that you will see more price increases in the industry, given the headwinds everyone has been facing in this space.” Higher cotton prices from Chinese producers are causing garment maker Carter’s Inc. to consider how much it can rise. “We are starting to see signs of inflation in the input costs of products, particularly those related to fabric,” CEO Michael Casey said in an April 30 earnings call. The company will offer “fewer promotions” this year, he said, amid a return of resilient buyers backed by stimulus payments. Maize, too, is on the growing list of commodities that are seeing their prices rise. Futures surged this week above $ 7 a bushel for the first time in more than eight years at the Chicago Board of Trade, alongside increases for soybeans and wheat. scared Greg Sharenow, who manages an energy and commodities-focused portfolio at Pacific Investment Management Co. The premium on short-term deliveries over future commodity deliveries tracked by the Bloomberg Commodity Index has climbed to the most high for over 15 years, signaling immediate physical shortages in various markets, Sharenow said. He sees the price spike this time around as more organic, rather than the kind of anticipated demand seen from 2005 to 2008. Edward Robinson, deputy managing director and chief economist at Singapore’s central bank, said in a speech last week that he was monitoring the prices of Chinese producers. as a “significant upside risk” to its basic call that inflation should stay under control, helped by the slowing labor market. A surge in copper is crippling some Chinese manufacturers, which have idled units, delayed deliveries and even defaults on bank loans, data from a survey of the Shanghai metals market. This has already rippled through the production chain, delaying projects from power grids and real estate developers.The number has been in the spotlight as hot housing markets, especially in advanced economies, hit the spotlight. drive up raw material costs, Fed Chairman Jerome Powell said last week. the central bank was monitoring this market closely, although it currently has no financial stability issues in housing. Still, the sector has been emblematic of the K-shaped recovery, with cost hikes valuing middle-income buyers as homeowners reap gains. Markets have responded more calmly lately to the Fed’s mantra, bond yields little changed after Powell doubled last week. down on his reading of inflation and his still easy political stance. The inflation that runs through so many materials, however, could break that patience, as the pressure is on businesses and officials to avoid price increases for consumers. economy, ”said Douglas Porter, chief economist at BMO Capital Markets, in a May 1 report. “But as the anecdotes pile up, they end up turning into data.” Porter referred to a sample of 10 recent data sets, including U.S. employment costs, Canadian wages, and still skyrocketing shipping costs. you heat things up, you risk getting burned. (Updates with additional details on corn prices in the second paragraph after the cotton price chart.) For more articles like this, please visit us on the news source bloomberg.com. © 2021 Bloomberg LP