Inflation has had a significant impact on economies globally in the wake of the pandemic. Factors such as economic disruptions, supply chain issues, government and central bank interventions, and price increases have all contributed to a rise in inflation. However, this trend appears to be reversing, albeit gradually.
By the end of 2022, global growth was at 2.3%, with average inflation peaking at 8.7%. According to the latest International Monetary Fund (IMF) report – World Economic Outlook released in April 2024, growth is expected to stabilise around 3.2%, with average inflation decreasing from 5.9% in 2024 to 4.5% in 2025.
Positive supply developments, including a decrease in energy prices and a rebound in labour supply, have contributed to this trend. Additionally, decisive monetary policy actions and improved frameworks have helped to stabilise inflation expectations, particularly in emerging markets.
However, recent data shows a slight upward trend in both headline and core inflation figures, raising concerns. While some progress has been made, particularly in energy and goods inflation, services inflation remains high, posing a potential obstacle to further disinflation.
In the euro area, growth is expected to increase, albeit from low levels, due to factors such as tight monetary policy, past energy costs, and fiscal consolidation efforts. However, persistent services inflation and wage growth could delay a return to target inflation levels.
The supply chain industry has been significantly affected by inflation, with disruptions in logistics operations and increased production and transportation costs. Persistent challenges such as transportation congestion, container shortages, geopolitical tensions, and economic uncertainties have highlighted the need for resilience in supply chains.
As inflation continues, it can lead to higher logistics costs and decreased consumer purchasing power, further exacerbating inflationary pressures. A report from McKinsey projects a surge in rates across the supply chain at 2.9% in 2024, attributing this to ongoing economic and geopolitical shifts and disruptions within supply chains.
Overall, there is a continued need for resilience, flexibility, and partnership in navigating these challenges. Companies can strengthen their supply chains by collaborating closely with partners, enhancing agility and connectivity.
Supply chain strategists can use GSCi – Ti’s online data platform – to identify opportunities for growth, support strategic decisions, help them stay abreast of industry trends and development, as well as understand future impacts on the industry.
Visit GSCI subscription to sign up today or contact Michael Clover for a free demonstration: [email protected] | +44 (0) 1666 519907
