Business Maverick: Inflation Risk Intensifies With Supply Shortages Multiplying

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Signs of inflation are picking up, with a mounting number of consumer-facing companies warning in recent days that supply shortages and logistical logjams may force them to raise prices.

The Bloomberg Commodity Spot Index, which tracks 23 raw materials, has risen to its highest level in almost a decade. That has pushed a gauge of global manufacturing output prices to its highest point since 2009, and U.S. producer prices to levels not seen since 2008, according to data from JPMorgan Chase & Co. and IHS Markit. JPMorgan analysts also estimate non-food and energy import prices in the biggest economies rose almost 4% in the first quarter, the most in three years.

Some businesses have found they can’t afford to wait for “temporary” increases to pass. That means consumers can expect to deal with higher costs for a range of daily items, including“Straight price increases will continue to be an important element as we look at the back half of the year,” Colgate-Palmolive Chief Executive Officer Noel Wallace said late last month when the company announced earnings.

The underlying materials shortage has spooked Greg Sharenow, who manages a portfolio focused on energy and commodities at Pacific Investment Management Co. Chinese producer prices closely as an “important upside risk” to his baseline call that inflation should stay in check, helped by labor-market slack.some Chinese manufacturers, who have idled units, delayed deliveries and even defaulted on bank loans, data from a Shanghai Metals Market survey show. That’s already rippled through the production chain, delaying projects by power grids and property developers.markets, especially in advanced economies, are driving up costs for the commodity.

 

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