Russian-Ukrainian conflict drives up commodity prices and builds on global inflationary pressures
Meanwhile, global inflationary pressures persist as Russia’s attack on Ukraine pushes up commodity prices.
The Fed has launched a campaign of interest rate hikes that is expected to be the most aggressive since the mid-2000s. After raising rates a quarter point and signaling six more hikes this year, the Fed Chairman , Jerome Powell, told reporters that inflation was too high, the labor market was overheated and price stability was a “prerequisite” for the central bank as it tackles pressures on highest prices for 40 years.
Prices paid to US producers rose sharply in February due to rising commodity costs. The producer price index for final demand rose 10% from February last year and 0.8% from the previous month.
US importers, plagued by a depleted supply chain, are increasingly offering the best price for long-term shipping contracts that may not even be honored as they try everything it takes to guarantee the arrival of their products. The boom in demand for goods caused by the pandemic has pushed both contract rates and spot rates for shipping to the records – moving goods from place to place costs about 11 times more than before the COVID-19 outbreak.
Russia is a powerhouse of raw materials, producing and exporting huge amounts of materials the world uses to build cars, transport people and goods, bake bread and keep the lights on. Its attack on Ukraine is limiting these crucial supplies – or threatening to do so – as it increasingly isolates itself from the global economy, driving up prices.
Russia’s oil output could fall by around a quarter next month, inflicting the biggest supply shock in decades as buyers shy away from the country’s exports following its attack on Ukraine, it said. said the International Energy Agency. Russian oil production could fall by 3 million barrels a day, further crushing a global market already strained by the post-pandemic rebound in demand.
The French central bank said the war in Ukraine is already affecting the economy and creating great uncertainty that makes it difficult to predict how inflation will pick up or how much the recovery from the pandemic will slow.
China’s surprisingly strong economic data for the first two months of this year has sparked heated discussion among analysts who are struggling to reconcile the numbers with underlying indicators showing a much weaker picture. Some of the most important figures in the National Bureau of Statistics release are not supported by a detailed breakdown of the data, several economists have pointed out.
Bank of Japan Governor Haruhiko Kuroda doubled down on his pledge to continue stimulus even if inflation continues to pick up, refuting the need to join a global wave of central bank normalization policies. The BOJ left interest rates and asset purchases unchanged and lowered its assessment of the economy, citing the impact of COVID-19.
Central banks in five African countries are likely to raise interest rates in the coming weeks to tame inflationary pressures that threaten to take hold. Those in the other seven are expected to keep borrowing costs on hold as they assess the impact of supply shocks caused by Russia’s war on Ukraine.
Argentina’s inflation accelerated in February to its fastest pace in nearly a year, beating forecasts and defying the government’s targets for this year in its preliminary agreement with the International Monetary Fund.