Home Business News Ongoing attacks in Red Sea is ‘concerning’ as economists warn of higher inflation

Ongoing attacks in Red Sea is ‘concerning’ as economists warn of higher inflation

18th Jan 24 2:04 pm

The Prime Minister Rishi Sunak has said the ongoing attacks on commercial shipping in the Red Sea is “concerning.”

The UK are urging the Iranian back Houthis militants based in Yemen to “desist” with their “illegal” attacks on cargo vessels in the Red Sea.

Global shipping companies are no longer travelling through the Suez Canal and have diverted thousands of miles around the Cape of Good Hope which will push shipping costs up.

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Despite the RAF, Royal Navy and US counterparts having conducted airstrikes on Yemen the Houthis remain steadfast in their attacks in the Red Sea.

On Thursday the US military confirmed they launched another wave of attacks from warships and submarines against Houthis targets across Yemen.

The Prime Minister told reporters on Thursday, “The rise in attacks on commercial shipping is both illegal and causing enormous disruption to the global economy and putting innocent lives at risk.

“It was right that we took action to protect both interests and lives.

“And together with allies, we have been very clear in our condemnation of their behaviour.

“We will continue to urge them to desist from carrying out what are illegal attacks, putting people’s lives at risk.”

The Yemeni militants pose a serious threat to global shipping in the region and the Suez Canal serves around 15% of the world’s cargo.

On Wednesday inflation rose to the fastest rate than expected in December and economists are warning that there could be further increases due to the growing uncertainty in the Middle East.

According to official figures on Wednesday inflation has unexpectedly risen to 4% for the first time since February 2023, most economists had expected the rate to fall to 3.8%.

The annualised inflation was forecast to come in at 3.8% (Trading Economics) and core Inflation came in at 5.1% in the 12 months to December 2023, unchanged from 5.1% in November.

Policy makers are warning that this could now negatively impact the Bank of England’s decision to lower interest rates.

Pepco, the owner of Poundland has warned the conflict in the Red Sea could have an impact on products available in their stores.

“We note that the current situation in the Red Sea is leading to elevated spot freight rates and delays to container lead times,” Pepco said on Thursday.

“The majority of our freight costs are contracted until the end of the third quarter, but the business is facing additional surcharges from carriers in relation to the longer shipping routes being taken.

“While there is limited impact on product availability currently, a prolonged issue in the region could also impact supply in the coming months.”

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