Key facts
- Operating in a riskier global environment means higher business costs.
- Increased costs for goods like food and electronics are expected.
- Supply chain flexibility, including alternative manufacturers and stockpiling, is costly.
- The IMF forecasts global inflation to rise to 4.7% in 2026.
- Disruptions in key shipping straits are forcing costly rerouting and alternative transport methods.
- Higher freight rates and longer lead times are impacting manufacturing and consumer prices.
Businesses are facing persistently higher prices due to an increasingly dangerous and unpredictable global landscape, according to reports.
Even if current conflicts, such as the war involving Iran, subside, the increased cost of doing business is expected to linger. Executives across sectors like pharmaceuticals, clothing, and electronics are prioritizing flexibility in their supply chains, which includes having alternative manufacturers in different locations, stockpiling goods, and developing new routes. This flexibility, however, comes at a cost, inherently contributing to inflation.
The International Monetary Fund has forecast a rise in global inflation to 4.7% in 2026 from 4.1% in 2025, driven by higher prices for essential commodities like energy, metals, fertilizer, and food. These calculations were made before recent escalations in hostilities that have driven up oil prices.
Disruptions in key shipping lanes, such as the Strait of Hormuz, are forcing companies like Maersk to use more expensive workarounds, such as rail and truck transport, which can add approximately $1,000 per container. Analysts suggest that a proposed 20% fee on cargo through the Strait of Hormuz could double shipping costs.
Freight rates remain high by historical standards, with some companies reporting rates 84% higher than a year ago. Longer lead times, increased freight costs, and elevated energy prices are expected to put further pressure on consumer prices. Shipping lines have also engaged in "slow steaming" to save on fuel costs. Insurance costs are also likely to remain elevated until a period of sustained stability is achieved.
Companies are recognizing that they can no longer rely on single pathways for trade and must develop alternatives, indicating a fundamental shift in the operating environment.