The result of trade diversion is reduced shipping capacity, longer transit times by sea, and dramatically increased shipping costs. In this sense, we have already seen shipping costs increase by up to 120% on average on the main routes in late December and early January. The Shanghai-Rotterdam route has been the hardest hit (276%), posing serious risks to supply chains and inflation prospects, especially in Europe. This could soon be reflected in producer prices and, of course, consumer prices as well.
The impact of the Red Sea conflict on supply chains is already being felt in Europe, with Tesla announcing it will suspend most car production at its Berlin factory. Furthermore, a conflict in Taiwan cannot be ruled out, which could pose an additional risk of inflation. Additionally, coordinated US and UK airstrikes against the Houthis in Yemen overnight have sent global oil prices up again. Adding to the tension is the fact that Iran has also They seized an oil tanker in the Gulf of Oman.
In our view, all these global developments have increased external risks and therefore justify caution, which is why we expect the National Bank of Hungary to maintain the previous pace of 75 basis points of easing at the January meeting.