Global price hikes in manufactured goods, energy and shipping are impacting the costs of exports and imports, as well as contributing to today’s (17 August) “shocking” inflation figures from the ONS, IOE&IT director general Marco Forgione has warned.
According to the new ONS data consumer price inflation reached 10.1% in July, exceeding 10% for the first time in 40 years. It is only the fourth time 10% has been breached in the last 70 years.
The producer price index, which measures the prices of goods bought and sold by UK manufacturers, also soared to 17.1% – its highest since 1977.
‘Urgent’ action needed
Responding to the inflation news, IOE&IT director general Marco Forgione said government must now take “urgent” action. He said:
“This morning’s shocking inflation figure is significantly higher than experts predicted.
“Interest rates have more than doubled since October 2021, energy costs for business are uncapped and rocketing up, consumer buying power is down, transport costs are at eye watering levels and inflation is now running at double digits.
“The most recent IOE&IT Exporter Monitor shows inflationary pressure the cost of imports and exports, which will undoubtedly feed through to consumer prices.”
Inflation has become an issue across global markets ever since the pandemic, according to the Times. The situation has since been worsened by the war in Ukraine which has disrupted supplies of oil, gas, wheat and other key commodities.
“It's inevitable that UK supply chains that rely on global trade will experience some form of disruption,” said Chris Rogers, principal supply chain economist at freight forwarding firm Flexport, to Politico.
Supply chain pressures
In the UK, a fresh wave of labour strikes could add yet further strain to supply chains, just as the high shipping costs that initially drove inflation during and after the pandemic begin to come down.
Workers at the Port of Liverpool, the UK’s fourth largest dock by volume, this week opted to strike over pay, joining fellow workers at Felixstowe — the country’s largest port — who also recently announced eight days of industrial action.
Liverpool workers rejected a 7% pay increase, saying that, due to inflation, it’s a “real terms pay cut”.