LONDON/TOKYO, Oct 14 (Reuters) – From beef bowls in Tokyo to fried chicken in London, consumers are starting to feel the pinch from the surge in costs coursing through the global economy.
The rebound as coronavirus restrictions are eased has exposed supply chain shortages, with firms scrambling for workers, ships and even fuel to power factories, threatening the fledgling economic recovery.
Britain’s biggest chicken producer said that the country’s 20-year cheap food binge is ending and food price inflation could hit double digits.
“The days when you could feed a family of four with a 3 pound ($4) chicken are coming to an end,” Ranjit Singh Boparan, owner of the 2 Sisters Group, said.
Shortages of warehouse workers, truckers and butchers as the world’s fifth-largest economy deals with Brexit as well as COVID is exacerbating strains being felt globally by international business.
IKEA is leasing more ships, buying containers and re-routing goods as the world’s largest furniture brand seeks to mitigate a “perfect storm” of disruptions.
Jon Abrahamsson, chief executive at Inter IKEA, told Reuters he expects the crisis to extend into 2022, with the biggest challenge getting goods out of China, where around a quarter of IKEA products are made.
IKEA said stores in North America have been hardest hit by product shortages, followed by Europe.
In the United States, President Joe Biden on Wednesday urged the private sector to help ease blockages that are threatening to disrupt the U.S. holiday season.
Biden said the Port of Los Angeles would join the Port of Long Beach in working round-the-clock to unload about 500,000 containers, while Walmart (WMT.N), Target (TGT.N) and other big retailers would expand overnight operations to help out.
Even in Japan, where weak growth has meant that prices of many things – as well as wages – have not risen much in decades, consumers and businesses are facing a price shock for basics such as coffee and beef bowls.
Japan’s core consumer inflation stopped falling in August, snapping a 12-month deflationary spell. Economists and policymakers expect to see recent price rises reflected in data over the coming months.
With central bankers on high alert and inflation in Spain, Ireland and Sweden hitting 13-year highs, European Central Bank President Christine Lagarde repeated that the upswing in Europe is seen as temporary and said there were no signs of it becoming embedded in wages.
“The impact of these factors should fade out … in the course of next year, dampening annual inflation,” Lagarde said.
Euro zone inflation is expected to hit 4% before the end of the year, twice the ECB’s target, and a growing number of economists see it remaining above target throughout 2022.
As northern China chills, coal prices held near record highs, with power plants stocking up to ease an energy crunch that sent factory gate inflation in the world’s second-largest economy to an at-least 25 year high in September.
Meanwhile, Coal India (COAL.NS), the world’s biggest coal miner, said it had temporarily stopped supplying non-power users as India battles one of its worst ever power supply deficits.
China’s power crisis, caused by shortages of coal, high fuel prices and booming post-pandemic industrial demand has halted production, including at factories supplying big brands such as Apple (AAPL.O).
Weak demand is capping consumer inflation, however, forcing policymakers to walk a tightrope between supporting the economy and further stoking producer prices.
There are few signs of any energy cost reprieve, with Brent crude oil futures above $84 a barrel on expectations that soaring natural gas prices will drive a switch to oil to meet winter heating needs.
“Higher energy prices are also adding to inflationary pressures that, along with power outages, could lead to lower industrial activity and a slowdown in the economic recovery,” the IEA said in its monthly oil report.
Top 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 output.
German government and industry sources told Reuters on Thursday that the government plans to ease the pressure on consumers from rising energy bills by cutting the surcharge which helps fund renewable energy investment by 43% next year.
And in Singapore two energy providers, including one of the largest independents, are exiting the market while at least three others have stopped accepting new clients due to rocketing wholesale energy prices, company sources told Reuters.
Meanwhile, the White House has been speaking with U.S. oil and gas producers about helping to bring down fuel costs, two sources familiar with the matter said.
The average U.S. retail cost of a gallon of gasoline is at a seven-year high, and winter fuel costs are forecast to surge.
CHIPS DOWN
Dutch navigation and digital mapping company TomTom (TOM2.AS) warned that supply chain problems in the auto sector could last well into 2022.
“Collectively we have underestimated how big the supply chain issues, and especially for semiconductor shortages, have been or have become”, TomTom Chief Financial Officer Taco Titulaer told Reuters.
A global semiconductor chip shortage has forced carmakers still recovering from coronavirus to halt production again.
Italian-American vehicle maker CNH Industrial (CNHI.MI) said on Wednesday it will temporarily shut several European agricultural, commercial vehicle and powertrain manufacturing plants because of problems procuring components.
Soaring demand is, however, proving a boon for some.
Taiwan’s TSMC (2330.TW), the world’s largest contract chipmaker, reported a near 14% jump in third quarter profit.
TSMC and Taiwan have become central to efforts to resolve the global chip shortage, which has also hit manufacturers of smartphones, laptops and consumer appliances.
Some companies, such as Toyota Motor Corp (7203.T) are intensifying efforts to restart production. The Japanese carmaker hopes to do so in December with a rebound in shipments from pandemic-hit suppliers, three sources told Reuters.
Additional reporting by Muyu Xu, Shivani Singh, David Stanway, Noah Browning, James Davey, Liangping Gao, Stella Qiu and Ryan Woo; Writing by Alexander Smith; Editing by Carmel Crimmins, Catherine Evans, Elaine Hardcastle
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/INPJU63TDRPIDKPSKULSPHDMNQ.jpg)
