Red Sea Crisis Escalates Global Shipping Costs, Threatens Wider Inflation

Malaysians brace for higher import costs, European economies face potential derailment of rate-cut plans amid rising shipping costs and supply chain disruptions.

Attacks by Houthi militants in the Red Sea have disrupted shipping in the Suez Canal, causing shipping and insurance costs to surge and forcing vessels to take longer routes around Africa.
Malaysians are expected to pay more for imported luxuries such as wine and gourmet food shipped from Europe due to the increased shipping costs.
Economists warn of wider inflation and supply chain disruptions if the Red Sea crisis persists, with potential impacts on key imports from Europe for sectors such as chemicals, machinery, and auto.
European economies, already dealing with high inflation, face new risks due to the disruption, potentially derailing plans by central banks to start cutting interest rates this year.
Despite the conflicts, oil and gasoline prices have remained stable due to weaker demand and plentiful supply, but a potential spike in energy prices remains the biggest risk to inflation.

Foreign Policy

Al Jazeera

South China Morning Post