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2021/05/17 / Erste Group Research

CEE Special | Supply-side pressures are building up

Commodity prices and shipping costs have gone through the roof since the end of last year. While global demand for goods surged as economies are opening up, supply side will need more time to catch up. Delivery bottlenecks and low inventories are also increasing the pressure.

As the pandemic situation improved in the US, China, and recently also in Europe, and restrictions have been gradually eased, global demand for raw materials has soared. Rising demand, coupled with supply chain disruptions and low inventories, is pushing commodity prices up. While global demand increased quickly, it will take a bit longer for the supply side to adjust and catch up.

Apart from the rise in commodity prices, producers have had to battle with the shortage of freight containers and the resulting higher costs of goods transport. The recent few months have also exposed the under-investment in new vessels and freight containers, highlighting their insufficient supply. The Baltic Dry index, which tracks rates for the largest ship classes, has soared around 700% since last April before easing a bit in recent days, hovering around its highest level in over a decade.

Growing commodity and freight costs are driving up producer prices, which have increased visibly across the CEE region since the beginning of the year. Even though the current higher shipping costs and raw material prices likely have a temporary nature, we could see some pass-through to inflation. We found that the relation between PPI and HICP is significant in all CEE countries except for Czechia, Romania and Slovenia.

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General information

AuthorErste Group Research
Product nameCEE Economies Special Report
Topic in focusFX, Macro/ Fixed income
Economy in focusCEE, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia
Currency in focusCroatian Kuna, Czech Koruna, Euro, Hungarian Forint, Polish Zloty, Romanian Leu, Serbian dinar
Sector in focus-


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