Supply-chain stress has eased in Europe, Asia and North America alike. But inflation is still too high, and elsewhere it remains stuck
toilet paper and medical equipment. But disruptions to the supply of these products during the early months of the pandemic barely registered in measures of aggregate supply-chain stress, such as the index put together by, a supply-chain consultancy. That changed in the summer of 2020, when the 27,000 firms surveyed for the index reported increasing problems getting what they needed to make their products.
Today, the same index has fallen back to pre-pandemic levels and even shows some spare capacity in supply chains . Companies are no longer stockpiling resources the way households hoarded toilet paper. Transport costs have also come down and staff shortages are less severe. Firms largely report that they can get what they need. This is a global pattern: supply-chain stress has eased in Europe, Asia and North America alike.
During the pandemic parts of the global value chains that make up modern manufacturing were interrupted for weeks or months, often in a haphazard way—only to be restarted with little notice, which caused additional supply problems. Free markets usually respond to disruptions by boosting production, finding alternative suppliers or tweaking production techniques. But the persistence of supply-chain snags surprised experts, and contributed to higher prices amid a post-pandemic surge in demand.
After three years the volatility has subsided. Inflation in goods prices may thus fall fast. In America prices of manufacturing goods have come down from their peak in 2022 and continue to fall. But inflation overall is still too high, and elsewhere it remains stuck. Figures published on June 21st showed that Britain’s annual rate of consumer-price inflation remained at 8.7% in May, above the Bank of England’s expectations.
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