While central bankers are raising interest rates to curb inflation, the supply side of the inflation issue is starting to ease, according to Fitch Ratings.
In a new report, the rating agency said global supply chain disruptions, which have helped stoke inflation, are “easing rapidly as shipping logjams are cleared and consumer demand growth softens.”
Shipping costs have declined sharply to near pre-pandemic levels as conditions return to normal, it said.
For instance, it reported that the cost of shipping a standard container from China to the U.S. West Coast — which had soared from US$1,400 per forty-foot equivalent unit (FFEU) before the pandemic to almost US$21,000 last September — is now back down to around US$2,500.
This decline has accelerated in recent weeks, particularly since August, it said. And shipping times have dropped too.
“Given that supply chains bottlenecks were a key factor behind the surge in inflation last year, the unwinding of these blockages bodes well for core goods price disinflation,” Fitch said.