2024-01-06 01:50:03
The New York Federal Reserve said on Friday (5th) that global supply chain pressures declined last month, but it may be just the calm before the storm.
According to the New York Fed, the Global Supply Chain Pressure Index (GSCPI) reported -0.15 in December last year and was revised upward to 0.13 in November. A negative index means supply chain pressure is lower than normal, and the power to push up inflationary pressure is also reduced.
Global supply chain stress index, source: NY Fed
The New York Fed did not explain the reasons for the decrease in supply chain pressure. The December reading is also the first time since February 2023, excluding November, to return to negative values.
Supply chain pressure is an often-cited source of inflationary pressure, such as when the Covid-19 epidemic first broke out, and disruptions in goods transportation caused price spikes. This index calculated by the New York Fed reached a historical high of 4.33 in December 2021, and then declined steadily. At the same time, the rising price pressure tracked also slowed down, and now the U.S. Federal Reserve (Fed) is almost It is determined that interest rate increases have ended and a rate cut is considered.
But Fed officials also note that the supply chain’s support for cooling inflation may have ended. According to the minutes of the Fed’s December meeting released on Wednesday, “Several officials participating in the meeting assessed that the recovery process of supply chains and labor supply has been roughly completed, so if we want to see continued progress in cooling inflation, it may mainly rely on products. and further declines in labor demand, while restrictive monetary policy still plays an important role.”
In the minutes of the meeting, Fed officials also listed supply chain issues as one of the items with rising risks in the future, saying that “following the supply chain improvement period, core commodity prices are likely to rebound.”
International merchant ships are detouring around Africa to avoid being attacked in the Red Sea, which may increase costs and delay delivery times. Raising the risk of rising inflation. Danish shipping giant Maersk announced on Friday that all ships scheduled to pass through the Red Sea have been rerouted and will bypass the Cape of Good Hope in Africa.
Jared Bernstien, chairman of the White House Council of Economic Advisers (CEA), told reporters on Friday that the United States will continue to contact its allies to assess any impact on prices and supply chains, but he also said that the problems so far have had a limited impact on energy prices.
Beyond geopolitics, there may be other factors that are putting pressure on the supply chain.
JPMorgan analysts Bruce Kasman and Nora Szentivanyi said on Thursday: “After the supply chain stress index fell sharply last year, it has reversed in recent months, with air and shipping costs rising significantly. In addition, as global factory output After a return to growth in the second half of last year, the disinflationary energy brought regarding by the contraction of the global manufacturing industry throughout the year also appears to be weakening.”
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