Discover more from Emerging World
Emerging Markets Daily - November 10
US Inflation Hits Three Decade High, China Factory Gate Inflation Soars, North Africa Food Security Crisis, Rebels Advance in Ethiopia, Emirates Airline Narrows Losses
The Top 5 Stories Shaping Emerging Markets from Global Media - November 10
US Inflation Hits Three Decade High
Wall Street Journal
“U.S. inflation hit a three-decade high in October—rising at a 6.2% annual rate—as pandemic-related supply shortages and continued strength in consumer demand continued to push up prices. The Labor Department said the consumer-price index, which measures what consumers pay for goods and services, increased at the fastest annual pace since 1990. Inflation also topped 5% for the fifth straight month…”
“Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives, thinks the U.S. is entering a six-month period of unusually high inflation. ‘I do think we’re moving into a new phase where inflation is broader and where things are going to get a little more intense,’ she said. ‘Part of that reflects that [supply-chain] bottlenecks are not resolved going into the holiday season, when a lot of purchases get made, and that the economy is doing really well, so you have strong demand…’”
“Covid-19 continues to be a wild-card factor. The outbreak of the Delta variant put downward pressure at the end of the summer on prices for travel, recreation and other services that involve close interaction. Spending on services has bounced back in recent weeks as coronavirus infections fell, which could put further upward pressure on prices.”
“Many companies are passing on higher costs to consumers. In October some 53% of small businesses raised prices, on net—a level last seen in the early 1980s—according to the National Federation of Independent Business, a trade association.”
“The U.S. inflation rate reached a 13-year high recently, triggering a debate about whether the country is entering an inflationary period similar to the 1970s…”
“Tom McTaggart, a pricing consultant and the founder of PricingAudit.com, said he began sensing a sustained rise in supply-chain-driven inflation during the summer. ‘It’s a never-ending loop—by the time you’ve implemented one price increase, you’re already ready to implement a new one,’ said Mr. McTaggart, who is based in Philadelphia. ‘It’s like trying to hit a moving target while you’re standing on a moving platform.’” Gwynn Guilford reports.
China’s Factory Gate Inflation Hits 26 Year High
“Factory gate prices in China rose at their fastest pace in 26 years in October, as crippling power shortages and record commodity prices hit the world’s second-biggest economy. China’s official producer price index increased 13.5 per cent compared with October 2020, according to figures released by the National Bureau of Statistics on Wednesday, its biggest monthly jump since 1995.”
“…Factory gate prices refer to the cost at which wholesalers buy materials from producers, not taking into account transport and distribution fees.”
“The acceleration in producer prices coupled with weakening manufacturing activity has raised fears of stagflation, complicating the country’s economic outlook as slowing growth poses a challenge to President Xi Jinping’s sweeping reforms of China’s business landscape.”
“Rising commodity prices have also compounded the country’s energy woes. China is battling soaring coal prices after flooding in critical mining regions and the government’s clean energy goals reduced output, while widespread power rationing led to a second monthly contraction in manufacturing activity in October.” William Langley and Edward White report.
As Prices Rise, North Africa Enters a Food Security Crisis
Middle East Institute
“North Africa has entered a food security crisis. Tunisia, Algeria, and Morocco are witnessing food inflation levels not seen since the civil unrest of the Arab Spring a decade ago.”
“Then, soaring food costs, particularly skyrocketing bread prices, helped fuel the popular protest movements against corruption and injustice that ousted Tunisia's long-time dictator Zine El Abidine Ben Ali and toppled other autocratic regimes in the Middle East and North Africa (MENA).”
“In Morocco and other MENA countries, the social unrest prompted significant political and socio-economic reform. Although the Maghreb's current food crisis was precipitated by the local and global economic shocks brought on by the onset of the COVID-19 pandemic in 2020 and its 2021 aftermath, the structural fragility of the food systems in Tunisia, Algeria, and Morocco is responsible for severity of the problem.”
“At the core of this fragility is the failure to implement adequate measures to address the impact of increased water scarcity and debilitating climate change.” Michael Tanchum writes in an MEI special report.
Rebel Advance Drives Diplomatic Efforts at Ethiopia Cease-Fire
“Reports that a joint opposition force might march on Addis Ababa have triggered a fresh push for a ceasefire and political talks. The call by Uganda's President Yoweri Museveni for a summit on Ethiopia's deepening crisis reveals growing alarm among regional leaders and the problems their organisations face in resolving it.”
“Ethiopian Prime Minister Abiy Ahmed harbours fewer suspicions about Uganda's regional initiatives than those coming from Kenya or Sudan. President Museveni made his call for a summit of East African heads of state on 4 November, exactly a year after the outbreak of war in Tigray.”
“Having turned away ex-presidents sent by the African Union, Abiy has kept the door open to Museveni and his envoys. Museveni's summit plan emerged two days after Abiy declared a national state of emergency in the wake of the Tigray Defence Forces' (TDF) capture of Dessie and Kombolcha, about 400 kilometres north of Addis Ababa.”
“Initially, Museveni's summit was slated to discuss the political crisis in Sudan but Ethiopia is now also on the agenda. The proposed summit date of 16 November may be brought forward as the sense of crisis intensifies in Addis Ababa.”
“There are conflicting reports about how close the TDF and its allies in the Oromo Liberation Army (OLA) are to the capital and whether they intend to march on it. Several western embassies and UN agencies are preparing to withdraw non-essential staff.”
“The direction of the war has swung, perhaps decisively, to Abiy's opponents in Tigray and Oromo. The OLA has taken a string of towns south-west of Addis with little or no opposition from the Ethiopian National Defence Force (ENDF).” Africa Confidential reports.
Emirates Airline Narrows First Half Loss As Travel Rebounds
“Emirates, the world's largest long-haul airline, narrowed its loss in the first-half of its fiscal year, amid a rebound in travel demand and stronger performance from its freight business.”
“First-half losses narrowed to $1.6 billion in the period from April to September, compared with a $3.4bn loss in the same period last year, the airline said in a statement on Wednesday.”
“As travel demand picked up, Emirates was operating passenger and cargo services to 139 airports as of the end of September, using its entire Boeing 777 fleet and 37 Airbus A380s. Overall capacity during the first six months of the year increased 66 per cent to 16.3 billion available tonne kilometres as countries eased travel and flight restrictions.”
“Capacity measured in available seat kilometres, more than tripled at 250 per cent. Passenger traffic carried, which is measured in revenue passenger kilometres, was up 335 per cent while the average passenger seat factor recovered to 47.9 per cent, compared with last year’s pandemic figure of 38.6 per cent.” Massoud A Derhally reports.
“The Emirates group narrowed its net loss to $1.6bn in the April to September period, compared with a $3.8bn loss in the same period last year.”
“The world breaks everyone, and afterward, many are strong at the broken places.” — Ernest Hemingway