The raw materials crisis: causes and effects. Here’s how much the prices have gone up

Rome, November 4, 2021. The perfect storm. There commodity crisis, joined to expensive fuels, next year will empty our pockets. The price increases will impact, according to the calculations, between 500 and 1,000 euros per family. But what has triggered the soaring costs of paper, plastic and cotton?

Commodities, the high prices shake the markets

The cause

Obviously, it was a number of factors that brought us to the edge of the ravine. The first domino, brutally simplifying, was the total block of activities due to Covid globally in 2020. The stop was followed by a particularly harsh winter, which has emptied gas stocks almost everywhere. When the pandemic loosened its grip, the whole world started up again at the same time and this generated a demand for paper, cotton, plastic and other oversized materials. The fuel crisis, with increases of 500%, has therefore caused the costs of transport to explode which have then passed on to raw materials. The most classic of vicious circles.

Price increases

But exactly what figures are we talking about? The price of the gas in ten months it has increased by 500%. The cotton registered a growth of 104%. The grain a few days ago it reached its record in Europe, reaching 297 euros per ton. The most in sixteen months it registered a + 77%. The paper costs 70% more than in 2020. The coffee (Arabica blend) jumped 59%.

Wages down, prices and bills soar

The repercussions for families

All increases, unfortunately, by hook or by crook will be passed on to consumers. Only governments can avoid, assuming the calculated risks, this bitter ending by easing the tax burden or calming prices. The overall sting for families in 2022 will be between 500 and 1,000 euros. But the first effects, according to the Codacons, we will already see them a Christmas. Celebrating with relatives and friends will cost us an average of 4% more than in 2019. Panettone will cost 10% more, followed by travel (+ 7%) and gifts (+ 5%).

The repercussions for businesses

The price rally is not good news for companies either. Several paper mills producing tissue in recent weeks have announced that if large retailers do not absorb the rise in costs they will be forced to stop production. The Lombardy regional councilor for economic development has made it known that due to the expensive bills there are companies that will suspend production in December.

Central banks

The rise in prices, or inflation, is pushing central banks to reduce the extraordinary measures put in place to counter the negative effects of the pandemic on the economy. Among the most probable measures that could take place in the coming months there is also theincrease in interest rates, practically zeroed since 2016. A move that will inevitably be reflected on variable mortgages.

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