Suez Canel being blocked only part of the reason for prices of goods increasing

CHATTANOOGA, Tennessee– Prices at the grocery store are on the rise and economic experts say it was expected.

‘You’re talking 10,000 truckloads of freight on a single ship and 400 ships were stranded waiting to get through,” said Craig Fuller with FreightWaves.

Worldwide shipping was disrupted for several days as the Suez Canal was blocked by a boat.

“It basically shut off one of the world’s most important waterways and transportation alleys,” said Fuller.

Fuller said this caused a major backup in the supply chain and will impact raw materials.

“A lot of manufacturing in the United States depends on raw materials from overseas so particular things like silk and certain types of food commodities may be delayed,” said Fuller.

UTC Economics professor Md Rafayet Alam said the boat back up is only one part of the supply and demand chain. He said prices are going up because gas prices increase shipping costs, people have more money to spend due to stimulus checks, and demand for goods is increasing.

“Now they haven’t spent much of the stimulus checks before, but now probably they have started spending that money,” said Alam.

Alam feels all of these supply and demand factors are part of the reason for grocery store prices increasing but he feels inflation is a bigger factor.

“There is a spike in inflation expectations at this moment and they’re trying to transfer that to the real prices of foods,” said Alam.

Alma said inflation is increasing due to potential increases in the minimum wage, uncertainty surrounding trade with other countries, and the proposed infrastructure package.

Categories: Chattanooga, Featured, Local News

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