Inflation, largely caused by global supply chain issues, has continued to cause pain for consumers both in the US and across the globe. In the US, prices rose at annual rate of 5.4% in September, the fifth straight month of inflation over 5%. In Germany, inflation hit a three-decade high, largely fueled by rising energy prices.
This inflation, which was widely characterized as transitory and temporary earlier this year, now appears more permanent as supply chain issues remain difficult to resolve. Labor shortages, combined with pent-up demand from the pandemic, are some of the largest contributors to this.
The most visible manifestation of the supply chain issues are the dozens of container ships sitting off the coast of California to drop off their loads at ports. While the Ports of Los Angeles and Long Beach have promised to transition to 24-hour workdays, it would take months for the backlog of goods to be processed.
Adding to this is the shortage of truck drivers within the US to move the goods from the coasts throughout the country. According to the American Trucking Association, around 80,000 truckers are missing from America’s highways, and they claim the problem will grow worse of the coming decade. Several factors have been attributed to this shortage, including dissatisfaction over pay and working hours, legal and regulatory restrictions, and resistance of mandatory vaccinations and testing.
Other factors contributing to the inflation are the large amount of monetary stimulus from central banks during the pandemic, leading to calls to raise interest rates to reduce the money supply and reduce inflation. Concerns over negatively affecting economic have made economic policymakers wary of taking this step.
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