The Weekly Worldview: Your Hikes Have Been Shipped

The energy shock is lasting long enough to move downstream. Shipping and diesel are raising delivered and producer costs, while the US may be showing the first core pass-through: September CPI hinted at greater transmission from energy via transportation into core goods inflation. Transpacific container rates have risen sharply, Panama congestion has increased and Red Sea diversions have lengthened shipping times; freight on a benchmark Middle East-to-China route, typically $1-3/bbl over the past five years, is now well above $30/bbl. Delayed refinery maintenance and higher shipping costs reinforce each other, and commodity strategists expect diesel markets to remain unusually tight into mid-2027, feeding through to agricultural and inland-transportation costs, with El Nino a possible delayed food-price shock. We therefore think the BoC and BoE will no longer look through the shock and expect hikes at their next meetings, before second-round effects show in data. Demand determines how