The ongoing challenges of getting products from factories to customers continue to drive the prices of automobiles, computer chips, furniture, and other products high, driving consumer prices higher in December than they have been since 1982.
Consumer price index rose 7 percent in the year through December and 5.5 percent after volatile prices like food and fuel were removed, data released Wednesday showed.
The prices for used cars and trucks rose by 37.3 percent during the course of the year through December, while food rose 6.3 percent and clothing rose 5.8 percent. Increased energy and rental costs also led to price increases.
The Omicron variant infects workers in factories, ports, shipping companies and warehouses, leading to an increasing shortage of some products and parts that are used to manufacture products. .
China is also imposing sweeping bans to prevent the variant from spreading before the Beijing Olympics next month, increasing the possibility of further disruptions to supply chains across the country in the coming weeks.
Despite some predictions that supply chain issues would resolve, many companies seem to have seen little improvement as supply chain issues continue to drive up costs and lead to higher sticker prices.
“Much of the tumultuous nature of the supply chain that occurred over the entire last year continues, and unfortunately there is not a lot of relief in sight,” said Douglas Kent, the executive vice president of strategy and alliances at Association for Supply Chain Management.
The price to ship a 40-foot container from Asia to the U.S. west coast hit $ 14,572 this week, slightly less than a high of more than $ 20,000 in September, but still nearly 10 times that much like two years ago. according to the Freightos Group.
The group’s data also showed that shipping times for sea shipments from China to the United States were extended to a record 80 days in December, an 85 percent increase from 2019.
Judah Levine, head of investigation for Freightos Group, said the delays are still a reality for U.S. importers due to growing demand and ongoing congestion in the ports of Los Angeles and Long Beach, the gateway for many goods from Asia. The recent flight cancellations due to the Omicron surge would further constrain cargo capacity and help keep tariffs high, he said.
Transport Secretary Pete Buttigieg said Tuesday in the port of Long Beach that record amounts of goods being transported through American ports are test systems that have been underinvested for decades, leading to delays and price increases.
But he commended the ports for making changes such as extending their operating hours and prioritizing deliveries of medical supplies, and said more investments would be made in expanding capacity.
“There’s no question that if you have access to shipping you’re going to see price pressures, and that will be part of our inflation challenge,” said Buttigieg.
As price increases weigh on the approval ratings of the president, the Biden government has convened meetings with executives from logistics companies, retailers, ports and freight forwarders to try to overcome these obstacles.
It has committed $ 17 billion in port investments under the Infrastructure Act. However, with most of the links in the supply chain owned by the private sector, the administration has found few short-term solutions to supply bottlenecks.
While much of the United States appears to be looking to return to normal, further disruptions in other parts of the world could prolong the hardship for businesses and consumers, at least once Omicron’s current rise wears off.
China, home to many of the world’s factories, has restricted millions of its residents in recent weeks to keep the Omicron variant at bay, including in the port cities of Ningbo, Tianjin and Shenzhen.
The country’s zero tolerance strategy for Covid leads to the furthest lockdowns since the pandemic began, slows traffic in some of the world’s busiest ports and gives cause for concern about further disruptions this year. China remains the largest supplier of goods to the United States.
“If you stick to your zero-fall doctrine, there is a risk of disaster in the global supply chain,” said Tinglong Dai, professor of operations management at Johns Hopkins University’s Carey School of Business.