Recently, my inbox has been FULL of stories of supply chain snarl-ups...
- expensive containers
- delays at ports
- chip shortages

Surveys of purchasing managers are also showing rising input costs...

Could inflation be on the way? (1/n) https://www.economist.com/finance-and-economics/2021/01/21/supply-bottlenecks-are-pushing-up-costs-for-manufacturers

When the pandemic first hit, some people worried about this.

BUT demand crashed so badly that even though businesses faced higher costs, they couldn't charge higher prices.

Inflation should have been LOW down the LONG list of policymakers' concerns

Now, demand seems to be recovering BUT it's still pretty subdued.

And remember, the bottlenecks that make the headlines often affect products that are a SMALL share of overall consumption.

Some prices will rise

@SmokeonCars reckons that disruptions in the car market will contribute to used car prices being 30% higher in April than they were a year earlier (partly because of a depressed base)

BUT assuming only temporary disruption, prices should return to normal

In conclusion, logistics managers are having a really stressful time (sorry).

But when it comes to supply chain bottlenecks generating headline inflation, most other people can chill out for now.

A footnote, which is that oil price moves are going to bump up headline inflation a bit. Prices collapsed last spring so in the coming months they'll look high relative to that depressed baseline. I give you permission to chill out about that too.

ANOTHER footnote - this column by @Neil_Irwin has some really nice analogies when talking about different kinds of inflation https://www.nytimes.com/2021/01/16/upshot/inflation-rise.html

And here's my piece again if you forgot to click at the beginning https://www.economist.com/finance-and-economics/2021/01/21/supply-bottlenecks-are-pushing-up-costs-for-manufacturers