Chicken and Chips ...

No Chicken in Nando's, No Chips at Nissan, No shakes at MacDonald's. Empty shelves are increasing. The head of the Co-Op said food shortages were the worst he has ever known. Evidently not a war baby, CEO Steve Murrells announced the group was reducing some ranges. The ability to get food into stores was hit by post Brexit migration rules and Covid challenges.

This week, once again, the car industry reported production difficulties. Output fell by 37% last month. It was the worst July performance since 1956. Manufactures "grappled" with the global shortage of semi conductors.

Taper Tantrum

Markets awaited with interest the update from Fed Chair Jerome Powell this week, at the Jackson Hole virtual symposium. The central banker hinted the Fed could start scaling back stimulus this year. The inflation surge is expected to be temporary. There was no prospect of a rate rise anytime soon but some tapering of asset purchases could begin before the end of the year.

From hospitality to healthcare, companies are complaining they can't get staff. Recruitment difficulties are increasing, pay rates are rising. More perks and promises are on offer to secure sign ups. The pingdemic isn't helping.

This week, the SMMT reported production shortfalls as a result of the global chip shortage, caused by the pandemic and staff shortages caused by the pingdemic.

By the end of July, almost 700,000 workers had received isolation alerts from the NHS "Stay at Home" App. The motor trade is just one of many, hit by the pings. The list of "reserved" occupations is expected to rise. Isolation conditions will ease, for all in August.

JKA

Central Bankers came under increased pressure this week as inflation levels continue to rise. Jerome Powell, Chair of the Federal Reserve admits to being "uncomfortable" about the level of price increases.

“This is a shock going through the system associated with reopening of the economy, and it has driven inflation well above 2%. We’re not comfortable with that,” Mr. Powell told the Senate Banking Committee on Thursday. CPI Inflation hit 5.4% in June.

In the U.K. inflation CPI basis increased to 2.5% in June, the Bank expects levels to rise to 3% before returning towards the 2% target later this year. Not all members of the MPC are in agreement.

Dave Ramsden thinks inflation could hit 4% before falling back to target. He thinks conditions are such, a tightening in policy may be required somewhat sooner than he had previously expected.

Michael Saunders, in his "Inflation Outlook Speech" this week, explained, "In my view, if inflation indicators remain in line with recent trends, it may become appropriate fairly soon, to withdraw some of the current monetary stimulus.