Supply chain disruptions brought on by the conflict in Iran are expected to continue driving inflation higher across the globe, as shipping delays push energy prices and shopping costs to their highest levels in years.
According to the Global Manufacturing Purchasing Managers' Index (PMI) published by J.P. Morgan and S&P Global Market Intelligence, manufacturing producer costs saw their highest spike since June of 2022 this last April, while the overall rate of inflation jumped substantially for the third straight month. The PMI also tracked the largest lengthening of lead times for supplier deliveries to factories since August 2022.
"Higher shipping costs, due largely to the closure of the Strait of Hormuz, have also put upward pressure on prices for a wide variety of goods and inputs used by factories around the world to a degree not seen for four years," S&P Global added.
Additionally, the share of global manufacturers reporting higher raw materials purchasing to build safety stocks has risen to its highest level since June 2022, while the number of customers buying more from factories to accrue their own safety stocks is at its highest level in 15 years. This trend can be traced back to the start of the Iran war, which has dramatically slowed the global supply of crude oil needed for a wide range of manufacturing inputs.
According to AAA, the average price of diesel in the U.S. has risen by around $2 year-over-year as of late April. That's put significant pressure on trucking operators, which have had to pass those higher fuel costs along to shippers through surcharges and higher spot rates, raising transportation costs and feeding into higher prices for consumers. Moving forward, S&P Global expects to see a "marked upturn" in household inflation rates over the next six months as disruptions continue to ripple through supply chains as a result of the Iran war.
