Category: Inflation

3 Reasons for the Fertilizer and Food Shortage


This post is by Bruno Venditti from Visual Capitalist


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The-Fertilizer-Shortage-and-Food-Crisis

3 Reasons for the Fertilizer and Food Shortage

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Bad weather, the Russian invasion of Ukraine, and a shortage of fertilizer have led to fears of a global food crisis.

This infographic will help you understand the problem by highlighting three key factors behind the mounting food crisis.

#1: The Fertilizer Shortage

Since the beginning of the Russian invasion of Ukraine in February 2022, the war has disrupted shipments of fertilizer, an essential source of nutrients for crops.

Russia is the world’s top exporter of nitrogen fertilizer and ranks second in phosphorus and potassium fertilizer exports. Belarus, a Russian ally also contending with Western sanctions, is another major fertilizer producer. In addition, both countries collectively account for over 40% of global exports of the crop nutrient potash.

Here are the top 20 fertilizer exporters globally:

RankCountryExports Value (Billions in USD)
#1🇷🇺 Russia$12.5
#2🇨🇳 China$10.9
#3🇨🇦 Canada$6.6
#4🇲🇦 Morocco$5.7
#5🇺🇸 United States$4.1
#6🇸🇦 Saudi Arabia$3.6
#7🇳🇱 Netherlands$2.9
#8🇧🇪 Belgium$2.6
#9🇴🇲 Oman$2.6
#10🇶🇦 Qatar$2.2
#11🇩🇪 Germany$1.5
#12🇮🇱I srael$1.5
#13🇪🇬 Egypt$1.5
#14🇱🇹 Lithuania$1.4
#15🇩🇿 Algeria$1.4
#16🇪🇸 Spain$1.3
#17🇯🇴 Jordan$1.3
#18🇵🇱 Poland$1.2
#19🇲🇾 Malaysia$1.0
#20🇳🇬 Nigeria$1.0

The main destination of fertilizer exports from (Read more...)

BlackRock MyMap: Designed for First-Time Investors



Whether you’re sending your kids to university or preparing for retirement, meeting future financial needs can be a mighty challenge.

This is due to the many economic issues that eat away at your savings. Inflation, for example, is increasing the cost of gas, groceries, and other daily necessities. The COVID-19 pandemic, on the other hand, has thrown a wrench into many people’s personal finances.

Starting Your Investment Journey

This infographic from BlackRock introduces their MyMap range of multi-asset investment funds, and describes the benefits to first-time investors.

BlackRock MyMap Funds

Today’s Savings Struggles

The above infographic highlighted three savings struggles that make it difficult to meet your future financial goals.

The first is inflation, which refers to the increase in prices of goods and services over time. To understand how inflation can erode the value of your savings, consider this example:

  • £100 worth of goods in 2000 would cost £179 in 2021
  • £100 worth of goods in 1980 would cost £456 in 2021

In other words, inflation reduces the purchasing power of your savings over time.

The second savings struggle is increasing longevity, also known as longer life expectancies. Living a longer life is generally a good thing, but it does increase the risk of outliving your savings. Coming up with a solid retirement plan is becoming more important than ever.

A third struggle is the COVID-19 pandemic, which appears to be having a long-term impact on UK households. In a December 2021 survey, UK families were asked to (Read more...)

Comparing the Cost of Living Around the World


This post is by Carmen Ang from Visual Capitalist


Comparing The Cost of Living Around the World

The amount of money that’s needed to pay for day-to-day expenses like housing and food varies greatly from city to city. And some cities, like New York City, are known as especially expensive places to live.

So how do everyday expenses in New York City truly compare in costs to places like Beirut, Lebanon, or Bangalore, India?

This graphic by Victor Dépré (hypntic.data) uses 2022 data from Numbeo to compare the cost of living and purchasing power in 578 different cities around the world, using New York City as a benchmark for comparison.

The Cost of Living Index

Though New York City is widely recognized as one of the most expensive cities in the world, according to Numbeo—the world’s largest database of user-contributed data on cities and countries—there are a number of cities that are actually more expensive than the Big Apple.

Here’s a look at the comparative cost of living in 578 cities. For context, if a city has a cost of living index of 121, that means day-to-day expenses in it are 21% higher than New York’s, on average:

CityCountryCost of Living Index
HamiltonBermuda149.0
ZurichSwitzerland131.2
BaselSwitzerland130.9
ZugSwitzerland128.1
LuganoSwitzerland124.0
LausanneSwitzerland122.0
BeirutLebanon120.5
BernSwitzerland118.2
GenevaSwitzerland114.1
StavangerNorway104.6
Honolulu, HIUnited States103.7
OsloNorway102.3
BergenNorway100.4
New York, NYUnited States100.0
TrondheimNorway99.4
TromsoNorway (Read more...)

Charted: Four Decades of U.S. Inflation


This post is by Carmen Ang from Visual Capitalist


Four Decades of U.S. Inflation

Charted: Four Decades of U.S. Inflation

In May 2022, the annual rate of U.S. inflation grew to 8.6%—the highest it’s been in four decades, according to the Bureau of Labor Statistics.

What’s driving this surge, and what products are seeing the most significant price jumps?

This visualization by Pablo Alvarez shows U.S. inflation levels since 1982 and highlights a few product categories that have seen the biggest year-over-year increases.

The Category Breakdown

Perhaps unsurprisingly, energy sources have seen the biggest year-over-year climb. Gasoline has seen one of the biggest spikes, up 48.7% since May 2021.

Item% yearly change (May 2022)
Gasoline (all types)48.7%
Energy34.6%
Natural Gas30.2%
Electricity12.0%
Food10.1%
All items8.6%
Apparel5.0%

Across the U.S., the average price of gas sat at $4.807 per gallon as of July 4, and experts predict this figure could grow to $6 per gallon by the end of the summer.

While fuel prices were on the upswing prior to the Russia-Ukraine conflict, due to loosening COVID-19 restrictions and increased demand for travel, the conflict sent oil prices skyrocketing. This is because many countries placed sanctions on Russian oil, which put a squeeze on global supply.

Food has also seen a massive cost spike, up 10.1% since May 2021. This is largely due to supply-chain issues, increased transportation costs, and fertilizer shortages.

The Spending Spree Continues

Despite rising prices, many consumers have been continuing to spend. In May 2022, personal consumption expenditures (which account for (Read more...)

News Explainer: The Economic Crisis in Sri Lanka


This post is by Avery Koop from Visual Capitalist


Sri Lanka economic crisis explained

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Explained: the Economic Crisis in Sri Lanka

Sri Lanka is currently in an economic and political crisis of mass proportions, recently culminating in a default on its debt payments. The country is also nearly at empty on their foreign currency reserves, decreasing the ability to purchase imports and driving up domestic prices for goods.

There are several reasons for this crisis and the economic turmoil has sparked mass protests and violence across the country. This visual breaks down some of the elements that led to Sri Lanka’s current situation.

A Timeline of Events

The ongoing problems in Sri Lanka have bubbled up after years of economic mismanagement. Here’s a brief timeline looking at just some of the recent factors.

2009

In 2009, a decades-long civil war in the country ended and the government’s focus turned inward towards domestic production. However, a stress on local production and sales, instead of exports, increased the reliance on foreign goods.

2019

Unprompted cuts were introduced on income tax in 2019, leading to significant losses in government revenue, draining an already (Read more...)

Visualizing Raw Material Inflation in Canada



The following content is sponsored by Canadian Manufacturers & Exporters.

Raw material inflation in Canada

Raw Material Inflation in Canada

Inflation in Canada is climbing, and it has impacted the raw materials manufacturers use to produce goods. In fact, raw material prices have climbed 37% year-over-year on average.

More than half of manufacturers say this is one of their top challenges. In this graphic from Canadian Manufacturers & Exporters (CME), we show which materials have seen the biggest price spikes over the last year.

Inflation by Raw Material

The table below shows the rate of inflation in Canada for select raw materials from May 2021 to May 2022.

Raw MaterialCategoryPrice Change
(May 2021-May 2022)
CoalCrude Energy95.2%
Crude Oil & BitumenCrude Energy85.0%
WheatCrops73.4%
Natural GasCrude Energy50.3%
Beans, Peas, & LentilsCrops43.3%
Logs & Forestry ProductsForestry Products & Natural Rubber42.1%
Scrap MetalMetal Ores & Scrap40.3%
Canola/RapeseedCrops30.6%
PotashNon-metallic Minerals24.7%
Fish & Fishery ProductsAnimal Products23.7%
Lead & Zinc OresMetal Ores & Scrap21.2%
Cattle & CalvesAnimal Products10.2%
Eggs in ShellAnimal Products8.4%
PoultryAnimal Products8.3%
Sand, Gravel, & ClayNon-metallic Minerals8.1%
Fresh Fruit & NutsCrops8.0%
Nickel OresMetal Ores & Scrap5.8%
Tin, Iron Alloys, & Other OresMetal Ores & Scrap3.3%
Gold OresMetal Ores & Scrap2.1%
Natural RubberForestry Products & Natural Rubber1.4%

Crude energy materials led the rise, with the price of (Read more...)

Interest Rate Hikes vs. Inflation Rate, by Country


This post is by Jenna Ross from Visual Capitalist


graphic comparing interest rate hikes with inflation in various countries

Interest Rate Hikes vs. Inflation Rate, by Country

Imagine today’s high inflation like a car speeding down a hill. In order to slow it down, you need to hit the brakes. In this case, the “brakes” are interest rate hikes intended to slow spending. However, some central banks are hitting the brakes faster than others.

This graphic uses data from central banks and government websites to show how policy interest rates and inflation rates have changed since the start of the year. It was inspired by a chart created by Macrobond.

How Do Interest Rate Hikes Combat Inflation?

To understand how interest rates influence inflation, we need to understand how inflation works. Inflation is the result of too much money chasing too few goods. Over the last several months, this has occurred amid a surge in demand and supply chain disruptions worsened by Russia’s invasion of Ukraine.

In an effort to combat inflation, central banks will raise their policy rate. This is the rate they charge commercial banks for loans or pay commercial banks for deposits. Commercial banks pass on a portion of these higher rates to their customers, which reduces the purchasing power of businesses and consumers. For example, it becomes more expensive to borrow money for a house or car.

Ultimately, interest rate hikes act to slow spending and encourage saving. This motivates companies to increase prices at a slower rate, or lower prices, to stimulate demand.

Rising Interest Rates and Inflation

With inflation rates hitting (Read more...)

3 Insights From the FED’s Latest Economic Snapshot


This post is by Marcus Lu from Visual Capitalist


FED economic snapshot June 2022

3 Insights From the Latest U.S. Economic Data

Each month, the Federal Reserve Bank of New York publishes monthly economic snapshots.

To make this report accessible to a wider audience, we’ve identified the three most important takeaways from the report and compiled them into one infographic.

1. Growth figures in Q2 will make or break a recession

Generally speaking, a recession begins when an economy exhibits two consecutive quarters of negative GDP growth. Because U.S. GDP shrank by -1.5% in Q1 2022 (January to March), a lot rests on the Q2 figure (April to June) which should be released on July 28th.

Referencing strong business activity and continued growth in consumer spending, economists predict that U.S. GDP will grow by +2.1% in Q2. This would mark a decisive reversal from Q1, and put an end to recessionary fears for the time being.

Unfortunately, inflation is the top financial concern for Americans, and this is dampening consumer confidence. Shown below, the consumer confidence index reflects the public’s short-term outlook for income, business, and labor conditions.

consumer price index 2005 to 2022

Falling consumer confidence suggests that more people will delay big purchases such as cars, major appliances, and vacations.

2. The COVID-era housing boom could be over

Housing markets have been riding high since the beginning of the COVID-19 pandemic, but this run is likely coming to an end. Here’s a summary of what’s happened since 2020:

  • Lockdowns in early 2020 created lots of pent-up demand for homes
  • Greater household savings and record-low mortgage rates pushed (Read more...)

Poll: Inflation is the Top Financial Concern for Americans


This post is by Marcus Lu from Visual Capitalist


inflation top financial concern

The Briefing

  • Inflation has quickly become the top financial concern for American families
  • Compared to 2021, far fewer Americans believe their financial situation is improving

Poll: Inflation is the Top Financial Concern for Americans

A recent survey by Gallup discovered that inflation has become the top financial concern for Americans, surpassing other issues like low wages and housing costs.

While this result may not be too surprising, it is interesting to see how today’s concerns compare to that of previous years. For reference, the Consumer Price Index (CPI) has grown 8.3% between April 2021 and April 2022, representing a near 40-year high.

Poll Results

Results were collected in April 2022 and are based on the responses of over 1,000 U.S. adults. In this case, the specific question was: What is the most important financial problem facing your family today?

TrendApril 2022April 2021April 2020April 2019
Inflation32%8%3%6%
Low wages11%10%11%11%
Gas prices10%1%----
Housing costs8%9%9%8%
Health care costs7%8%8%17%

Percentage of respondents. Includes the top five categories, based on April 2022 results.

Based on these results, we can see that inflation began to gain momentum in early 2021. Rising gas prices, which are a significant contributor to overall inflation, also popped up in 2021.

Implications

Significantly fewer Americans feel confident about their financial situation due to the rising cost of living. This was captured in the same Gallup survey referenced (Read more...)

A Follow up on Inflation: The Disparate Effects on Company Values!



In my last post, I discussed how inflation's return has changed the calculus for investors, looking at how inflation affects returns on different asset classes, and tracing out the consequences for equity values, in the aggregate. In general, higher and more volatile inflation has negative effects on all financial assets, from stocks to corporate bonds to treasury bonds, and neutral to positive effects on gold, collectibles and real assets. That said, the impact of inflation on individual company values can vary widely, with a few companies benefiting, some affected only lightly, and other companies being affected more adversely, by higher than expected inflation. In an environment where finding inflation hedges has become the first priority for most investors, the search is on for companies that are less exposed to high and rising inflation. The conventional wisdom, based largely on investor experiences from the 1970s, is that commodity companies and firms with pricing power are the best ones to hold, if you fear inflation, but is that true, and even if it is true, why is it so?  To answer these questions, I will return to basics and try to trace  the effects of inflation on the drivers of value, with the intent of finding the characteristics of stocks with better inflation-hedging properties.

Inflation and Value

When in doubt about how any action or information plays out in value, I find it useful to go back to value basics, and trace out the effects of that action/information on value drivers. (Read more...)