US Inflation Fears Spread Worldwide

Sharp Rise in Crude Oil, Copper, and Grain Prices
Global Food Companies Adjust Prices Reflecting Inflation
US 10-Year Treasury Yield Hits 1.329% Intraday
Market on Edge Over Central Bank Monetary Policy Impact

[Asia Economy Reporters Byunghee Park, Yujin Jo, Eunbyeol Kim] "We have inflation, we are seeing inflation, and we are concerned about inflation." (Miguel Patricio, CEO of Kraft Heinz)

Concerns about inflation are rising, especially in the United States. This is due to the recent surge in commodity prices such as crude oil, copper, and grains, driven by expectations of economic recovery from President Joe Biden's large-scale stimulus package and the effects of COVID-19 vaccinations. Inflation is drawing close attention from markets because it influences central banks' monetary policies worldwide. If monetary policy normalization occurs too early without a real economic recovery, it could shock the markets.

Global food companies are already showing signs of adjusting prices to reflect inflation. According to major foreign media on the 16th (local time), Sean Connolly, CEO of Conagra Brands in the U.S., said in a recent internal executive video meeting that "price increases based on inflation are necessary this year." He explained that the surge in raw material prices combined with supply shortages amid increased household food demand due to COVID-19 is fueling food inflation. Conagra is a major food company specializing in frozen and convenience foods.

Patricio, CEO of Kraft Heinz, which mainly produces macaroni and cheese, mayonnaise, and salad dressings, expressed concerns about inflation and said, "There is a possibility of price increases for some product categories this year." Experts analyze that inflation, which was suppressed by COVID-19, is being stimulated by consumers' stockpiling of groceries and rising raw material prices.

Lumber prices are also notable. The composite price for framing lumber, announced weekly by Random Lengths, a provider of North American lumber market price information, recently rose to $966 per 1,000 board feet (1TBF), surpassing the previous all-time high of $955 recorded in September last year. Considering that lumber usually does not sell well in winter, this is an unusual phenomenon. The Federal Reserve's ultra-low interest rate policy appears to be stimulating demand for home purchases and renovations. In December last year, U.S. housing starts and building permits reached their highest levels since 2006. There are concerns that rising lumber prices could further drive up housing costs.

As inflation expectations spread, U.S. Treasury yields surged sharply that day. The 10-year Treasury yield climbed to 1.329% intraday, the highest level since February before the COVID-19 pandemic. The U.S. stock market closed mixed amid concerns about possible inflation.

Central banks around the world are also on high alert. If inflation occurs, it could accelerate the Federal Reserve's tapering of quantitative easing.

A senior official from the Bank of Korea explained, "Rather than worrying about inflation exceeding 4-5% as in the past, central banks are focusing on the possibility that monetary policy could deviate from expectations due to inflation at the 2-3% level."

This content was produced with the assistance of AI translation services.