Inflation Is a Global Issue, and International Supply Chains Need Solutions.
Despite recent efforts to curb the rising inflation rates seen in the U.S., little relief has been seen in the U.S. or in supply chains. These efforts included a third consecutive three-quarters percentage point interest rate hike from the Federal Reserve, even though Fed Chairman Jerome H Powell is quoted as saying “no one knows whether this process will lead to a recession or if so, how significant that recession would be.”
In fact, the rate hikes have been so significant, that some economists are saying that the measures could be too drastic. Their view, put simply, is that no hike increase to curb inflation will be effective without an increase in unemployment and a slowdown in wage growth — a sobering message considering both factors are hallmarks of a recession. Regardless, however, the overall uncertainty of the economic climate has spooked investors, with the S&P Index falling approximately 24% this year alone.
Global Inflation Concerns
While this is all concerning on a domestic front, the truth for international businesses is even bleaker, with economies around the world facing inflationary pressures at least as significant as the U.S. is seeing, if not more so. In Japan, for example, central bank policymakers are now warning that inflation may overshoot expectations, which would be a large blow to the low-interest rate policy promoted by Governor Haruhiko Kuroda. In India, market shares continue to fall amid losses seen in metal, bank, and auto companies industries, which is contributing further to inflationary concerns. In Turkey, inflation has hit an astounding 24-year high of 83% after rate cuts. Last month in England, the Bank of England completed its seventh consecutive interest rate increase, bringing it to a level last seen in 2008.
Some of the largest global concerns today are coming from, ironically, the U.S.’ aggressive attempts to curb inflation, which has large-scale repercussions for economies that depend on economic stability from richer nations. For example, according to the U.N., such actions have dire consequences for developing economies such as Zambia, Suriname, Sri Landa, and Pakistan.
“The real problem facing policymakers is not an inflation crisis caused by too much money chasing too few goods but a distributional crisis with too many firms paying too high dividends, too many people struggling from pay cheque to pay cheque and too many governments surviving from bond payment to bond payment,” said Richard Kozul-Wright, the head of the team in charge of the report.
Solutions for Supply Chains
This global reality is something that business supply chains will have to navigate. With ever-increasing interest rates against steep inflationary price hikes of critical electronic components, semiconductors, and other parts, projected budgets will face inevitable strain without long term solutions. Partstat Inventory Ownership Solutions, for example, have the unique ability to lock in semiconductor prices today. Even if prices increases as the market projects them to, Partstat customers will be able to keep their payments consistent and manageable for as long as needed. Plus, all the inventory will be stored in Partstat’s state-of-the-art storage facilities, free of any environmental risk and ready to be shipped whenever needed.