12 January 2024 , 22:47
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Cost of living-ravaged households may be hit by a new wave of price rises as the Red Sea rebel attacks could drag on for months.
Everything from toys and car parts to Australian wine and clothing may be delayed. Energy bills could also rise because the UK has become more dependent on gas imports from Qatar since Russia ’s war in Ukraine.
The BBC claimed Treasury modelling included crude oil prices rising by more than $10 a barrel, and a 25% jump in natural gas. The threat of fresh price spikes come just as inflation is easing. With shipping costs more than trebling in the past week, some firms have switched to air freight, already expensive and now more so.
Oil prices jumped yesterday after retaliatory air strikes by the US and UK overnight. Electric car maker Tesla has suspended production at its Berlin factory because of delays of parts from Asia. The route through the Red Sea and into the Suez Canal is a vital trade route from Asia to Europe and beyond.
Around 15% of global seaborne trade passes via the Red Sea, but container ship traffic there slumped 90% in the first week of January. Container ships are having to reroute via Africa and the Cape of Good Hope. Adding to the crisis, a drought has lowered water levels in the Panama Canal, another key trade route.
From roast dinners to Greggs - how much favourite items could rise by explained
Vincent Clerc, boss of shipping giant Maersk, warned it could take months to reopen the Red Sea trading route, adding: “It could potentially have quite significant consequences on global growth.” Tesco says its prices may have to go up due to the Red Sea disruption. Fashion giant Next warned of delays of up to two and a half weeks on deliveries.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said big firms were more able to absorb higher costs but warned the bigger, longer-term impact would be on oil and gas prices. “If the tinder box scenario continues, that will keep energy prices elevated,” she added.