Evelyn Reynolds

Higher shipping costs due to the Red Sea crisis could add 5 percentage points to OECD member import costs, the Paris-based group said Monday.
Clare Lombardelli, chief economist at the OECD, told CNBC that recent data on inflation has nonetheless been encouraging, and shipping-driven inflation pressures remain a risk rather than its base case.
Tiemen Meester, chief operating officer at Dubai-based logistics firm DP World, said the current situation was in a “steady state” and that cargo flows were catching up, but networks had already adjusted.

Elevated shipping costs as a result of ongoing tensions in the Red Sea could impede the global fight against inflation, the Organisation for Economic Co-operation and Development said Monday.
The Paris-based group estimates that the recent 100% rise in seaborne freight rates could increase import price inflation across its 38 member countries by nearly 5 percentage points if they persist.

That could add 0.4 percentage points to overall price rises after a year, the OECD said in its latest economic outlook.
In late 2023, major shipping firms began diverting their vessels away from Egypt’s Suez Canal, the quickest trade route between Europe and Asia, due to a spate of attacks by Iran-backed Houthi militants based in Yemen. Tensions remain high, with the navies of countries including the United States involved in the conflict.

A cargo ship travels on the Suez Canal in Ismailia Province, Egypt, Jan. 13, 2024. 
Ahmed Gomaa | Xinhua News Agency | Getty Images

Ships are taking the longer Cape of Good Hope route around the southern coast of Africa, which increases journey times by between 30% and 50%, taking capacity out of the global market.
However, the OECD also notes that the shipping industry had excess capacity last year, a result of new container ships being ordered, which should moderate cost pressures.
Clare Lombardelli, chief economist at the OECD, told CNBC on Monday that a sustained increase in inflation as a result of the latest crisis is a risk, but not the group’s base case.

“It’s something we’re watching closely … we have seen an increase in shipping prices, if that were to continue for for an extended period, then that would feed through into consumer price inflation. But at the moment, we don’t anticipate that to be the case,” Lombardelli said.
According to Tiemen Meester, chief operating officer at Dubai-based logistics firm DP World, European imports are presenting the biggest challenge and have seen significant delays to cargo that was already en route.
“Unfortunately, there’s higher cost in the inefficiencies in the network, so ultimately, the rates are going up. But it’s actually nowhere near to where they were at their peaks during Covid … How that costs will find its way to the consumer, we’ll have to see,” Meester told CNBC, describing it as a “short-term problem.”
“I think kind of where we are now is a steady state, because the networks have adjusted and cargo is flowing, bookings are taking, it just takes more time,” he added.

The OECD’s Lombardelli said that overall there has been positive data among its members in recent months showing inflation coming down consistently. This will help rebuild real incomes and support consumption, she said.
The OECD’s 38 members include the United States, United Kingdom, Australia, Canada, Mexico, France, Germany, Israel, Turkey, Japan and South Korea.
Its latest outlook hiked its economic growth forecast for the U.S. by 0.6 percentage points from its previous November estimate, to 2.1% for this year. Its euro zone outlook was lowered by 0.3 percentage points, to 0.6%, while its U.K. outlook was flat at 0.7%.
“We’ve seen positive news in the U.S., we’re seeing inflation coming down now, but we’re not seeing a big cost in terms of the labor market there,” Lombardelli told CNBC.
“Growth is looking stronger, and inflation is coming down. So you’ll see a rebuilding of real incomes there in the U.S., and that will support consumption growth.”
Europe has been hit harder by an energy price shock, the impact of inflation on real incomes and consumption, and its greater dependence on bank-based financing amid tighter montary policy, she said.
In the medium-term, the OECD expects a greater drag on growth from its aging workforce.
The OECD nonetheless sees the European Central Bank as being in a position to cut interest rates in the second half of the year if current trends continue, Lombardelli said. More

In January, Turkish inflation logged its biggest monthly jump since August with a 6.7% rise from December, while year-on-year inflation hit nearly 65%.
Food, beverages and tobacco, as well as transportation, all increased between roughly 5% and 7% month on month, while housing was up 7.4% since December.
The figures come two days after Turkey’s appointment of a new central bank governor, Fatih Karahan.

A tram passes shoppers as it travels along Istiklal Street in the Beyoglu district of Istanbul, Turkey, on Tuesday, Dec. 19, 2023.
Bloomberg | Bloomberg | Getty Images

In January, Turkish inflation logged its biggest monthly jump since August with a 6.7% rise from December, while year-on-year inflation hit nearly 65%, according to the Turkish central bank’s figures released Monday.
The consumer price index for the country of 85 million people increased by 64.86% annually, up slightly from 64.77% in December. Sectors with the largest monthly price rises were health at 17.7%, hotels, cafes and restaurants at 12%, and miscellaneous goods and services at just more than 10%. Clothing and footwear was the only sector showing a monthly price decrease, with -1.61%.

Food, beverages and tobacco, as well as transportation, all increased between roughly 5% and 7% month on month, while housing was up 7.4% since December.
The monthly rises, economists say, stem from a significant increase to the minimum wage that Turkey’s government mandated for 2024. The minimum wage for the year has risen to 17,002 Turkish lira ($556.50) per month, a 100% hike from January 2023.
Turkey’s central bank has been on a prolonged mission to bring down inflation, implementing eight consecutive interest rate hikes since May 2023, for a cumulative 3,650 basis points. The bank’s latest increase, on Jan. 25, raised the key interest rate by 250 basis points to 45%.
The more conventional approach follows several years of unorthodox policy during which Ankara refused to tighten rates despite ballooning inflation. The lira is down 38% against the dollar year to date and has lost more than 80% of its value against the greenback over the last five years. 
The latest inflation print comes just days after Turkey’s central bank governor, Hafize Gaye Erkan, announced her resignation, saying Friday that the decision was due to a “reputation assassination” campaign and the need to protect her family.

Erkan became the bank’s central governor by presidential decree in June 2023, and led — along with Turkish Finance Minister Mehmet Simek — the turnaround in Turkey’s monetary policy and subsequent series of interest rate rises.

Turkish Central Bank Governor Hafize Gaye Erkan answers questions during a news conference for the Inflation Report 2023-III in Ankara, Turkey on July 27, 2023.
Anadolu Agency | Anadolu Agency | Getty Images

She was replaced on Saturday by the central bank’s deputy governor, Fatih Karahan, who spent nearly a decade as an economist at the Federal Reserve Bank of New York.
January’s inflation figures “highlight the continued strength of services inflation and may put pressure on new central bank governor Karaham to restart the central bank’s tightening cycle,” Liam Peach, senior emerging markets economist at London-based Capital Economics, wrote in a research note.
“The fact that inflation didn’t rise significantly more than expected in January is positive given the uncertainty about the impact of the minimum wage hike,” Peach wrote. “But the figures present a small setback to the disinflation process and highlight the continued strength of services inflation. For now, the central bank’s end-year inflation forecast of 36% remains intact.”   More

Black males who were at least 20 years old saw an unemployment rate of 5.3% in January, up from 4.6% in December.
By comparison, white men saw a jobless rate of just 3.3% in January, holding steady from December.
The average white worker age 16 or older had a median weekly pay that was nearly 20% higher than their Black counterparts, according to federal data as of the last quarter of 2023

A networking and hiring event for professionals of color in Minneapolis, Minnesota.
Michael Siluk | Getty Images

Black men lost ground in the workforce last month, marking a continuation of the disparities that have permeated the U.S. labor market.
Black males who were at least 20 years old saw an unemployment rate of 5.3% in January, up from 4.6% in December, according to seasonally adjusted data released Friday from the U.S. Department of Labor. These workers had the highest unemployment rate when breaking down Black, Hispanic and white workers by gender.

By comparison, white men saw a jobless rate of just 3.3% in January, holding steady from December. The overall unemployment rate was unchanged from December at 3.7%.
Meanwhile, the Black community as a whole was the only tracked racial group to see unemployment increase from December. This underscores the effect of job losses among Black men, especially considering the fact that the rate for Black women was unchanged between December and January at 4.8%.
Though the uptick in the unemployment rate for Black men is something to monitor, it can be more indicative of an anomaly in December’s low data, said Elise Gould, senior economist at the Economic Policy Institute. January’s 5.3% rate comes basically in line with the average 2023 month, while December’s 4.6% was the lowest level seen in the year.
The tight labor market experienced during the Covid-19 pandemic helped close the gap in work-related opportunities among Black and white men, she said. Indeed, the difference in unemployment rates between Black and white men shrunk to 2 percentage points in January from 4.1 percentage points in the same month in 2019.
Growth in the total number of employed Black men and the ratio of those with jobs to the total population compared with the start of 2023 also paints a picture of improvement, she added.

But Gould said the continued inequity in employment and pay highlights the need for further social progress, while bolstering the argument that a strong labor market alone won’t bring equality.
The average white worker age 16 or older had a median weekly pay that was nearly 20% higher than their Black counterparts, according to federal data as of the last quarter of 2023. That disparity grew to almost 25% when looking at male workers alone.
“A better economy absolutely can help historically disadvantaged groups more because they’re the ones that are often left out and are slow to recover in weaker times,” Gould said. “Full employment is definitely sort of a requirement for many historically marginalized groups to be able to see positive impact in the labor market, but it’s not the only thing.”
She pointed to unions as one example of a positive force for Black workers, noting that the wage transparency among members can help close any racial pay gaps.

‘A canary in the coal mine’

When combining genders, the unemployment rates of white and Asian workers ticked lower in January to levels last seen in late fall. The rate of unemployed Hispanics held steady from December at 5%, while the share of jobless Black workers inched higher to 5.3% from 5.2%.
Gould warned that month-to-month variations like what was seen in the unemployment rate of Black men can be fickle. Due to this, she said it’s important to evaluate longer-term trends before drawing conclusions.
Still, Gould said following employment patterns among Black workers and other marginalized groups can be important for spotting major economic trends. That’s true even when broader employment data like what was released on Friday signals a “hot” labor market, she added.
“It’s a canary in the coal mine,” she said. “When you’re thinking about where you’re going to see the signs of a recession, you’re not seeing it in the data today, but it’s always something to keep an eye on.”
— CNBC’s Gabriel Cortes contributed reporting.Don’t miss these stories from CNBC PRO: More