Why is inflation hitting majority of the countries worldwide seemingly at the same time?
In: 4
Because we have a global economy, now, where commodities like grain, oil & natural gas, even microchips, to an extent, are traded around the world, but have limited amounts available at any given time.
Other answers have talked about grain and fuel prices and those reasons, but there’s another I haven’t seen mentioned, yet:
Microchips – while many companies can design chips, the extremely small size of modern chips means that precision equipment is necessary to mass produce them reliably. TSMC in Taiwan has a handful of factories in East Asia that can make these latest chips, and no one else. This has been coming for a few years. The older factories in the US, Europe and Japan cannot mass produce these chips. The continual cycle of upgrades in computers, phones and other electronics, means there is a large and constant demand. As factories shut down for periods or shipping of raw materials was delayed, this caused a production backlog that was months long. Everything needing chips was facing shortages – even car manufacturers were halting production lines because they lacked the chips necessary.
There has been a lot of investment in new factories with the latest equipment and processes, but the truth is it takes YEARS to build the production lines and then you have to tweak things to optimize it for mass production levels with an acceptable failure rate. There’s just no easy fix.
Again – the other answers here give the big picture; this is just one piece of the problem.
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