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.