Disruptions to the global supply chain pushed consumer price inflation in South Africa to 5.9% in December 2021, ‘mainly due to the impact of higher international crude oil prices on domestic fuel prices and transport costs” before moderating to 5.7% in January and February 2022.
“Producer price inflation for intermediate manufactured goods accelerated to 23.1% in November and December 2021, reflecting commodity shortages, before moderating only slightly to 21% in January 2022,” according to an analysis by A Wolhuter and published by the South African Reserve Bank (SARB).
The analysis compiled a Composite Supply Chain Pressure Index (CSCPI) from 10 component indicators (including volumes at ports and docks, producer price index for manufactured goods and inventory-to-sales ratio in manufacturing and trade). “A composite index makes it easier to measure multi-dimensional components by combining individual indicators into a single measure. This index can then be tracked as a gauge to monitor whether pressures are intensifying (a rising index level) or abating (a rising index level). of decreasing index).”
South Africa’s CSCPI rose sharply from June 2020 after moving broadly sideways in a fairly narrow range for over 10 years, and reached its highest level in over 16 years in February 2022. “The increase in CSCPI followed the first Covid-19- Supply chains were further impacted by the rise of the Delta variant and by domestic factors such as civil unrest and Transnet port disruptions in July.
“The CSCPI peaked in February 2022 as supply chain pressures escalated further with the spread of the Omicron variant, the implementation of a zero Covid-19 policy in China and the Chinese Lunar New Year impacting employee absenteeism as well as continued depletion of already low inventory levels Conflict between Russia and Ukraine could further prolong global supply chain constraints and national.
“The accumulation of empty containers in some ports has also delayed the repositioning of containers to major ports. worsened supply chain disruptions.”
The analysis also drew a comparison of CSCPI between current supply chain pressures and just before the global financial crisis in 2007 and 2008.
“Unlike the financial crisis, the Covid-19 pandemic is a completely exogenous and unprecedented shock that has suddenly and severely impacted both supply and demand for goods and services without warning, and has called for corrective measures. Tremendous monetary and fiscal stimulus The strong recovery in demand following the easing of restrictions, particularly for commodities, saw trade volumes and prices rise sharply while supply could not keep up, causing pressures and bottlenecks in the supply chain.”
The CSCPI, according to the study, is useful for monitoring whether supply chain pressures are intensifying or easing,” which could help assess the transitory or more permanent nature of rising inflationary pressures emanating from this source. The most recent reading from the CSCPI indicates that domestic supply chain pressures remain elevated and have intensified further in the early months of 2022.”