Economic recovery and inflation are increasingly being shaped by supply-chain issues: notably labour shortages and production bottlenecks. Manufacturers say a lack of equipment and materials are limiting production, while transport costs have surged.

These shortages could have a lingering impact on inflation, which is now being felt across a range of sectors. Labour shortages are forcing employers to raise wages. Provided the business cycle does not end abruptly, the environment still favours equities over bonds. Nevertheless, the risk for markets is that higher inflation becomes more entrenched, forcing central banks to raise rates.

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This episode was recorded on 30/09/2021

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