The rerouting of trade ships away from the Red Sea has come at a time of disruption to shipping elsewhere in the world, but it is unlikely to alter the broad pattern of falling core inflation in 2024. We expect the recent rise in oil prices to prove temporary, goods shortages should be avoided, and shipping costs do not look set to surge. Even if shipping disruption did cause a significant increase in firms’ input costs, soft demand and replenished stocks have weakened their pricing power to pass them onto end consumers.
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