Companies across Europe are stepping up price increases to cope with mounting cost pressure and business disruption, adding to the alarm bells about an inflation spike that could spell trouble for the economy.
A survey Friday showed businesses raised prices at one of the fastest paces this century in July. It came hot on the heels of a chorus of executives at companies making everything from ice cream to industrial robots and chemicals who are feeling the heat from rising raw materials prices and snarled supply chains that've sent shipping costs through the roof.
"More or less all costs have gone up," ABB Ltd. Chief Executive Officer Bjoern Rosengren said on Bloomberg Television this week. "Yes, we're transferring some of that to our customer but also trying to become more efficient in our operations."
Much of the wholesale price squeeze is linked to the rapid rebound in demand as economies bounce back from covid-19 restrictions. That's led to supply disruption and forced companies to pay more to get their hands on crucial raw materials. The scramble to ramp up production after the recession in 2020 has also created shortages across multiple industries, with semiconductors one of the most high-profile examples.
Among those raising prices is Unilever, which said expensive crude and palm oil, as well as freight costs, were behind its decision to charge more for everything from bouillon cubes to hand sanitizer. Dutch paint-maker Akzo Nobel, which supplies Apple and BMW, said it's already raised product prices 4.5% and is planning further increases this year.
"We've seen further significant cost inflation emerge," Unilever Chief Executive Alan Jope said. "Our pricing is accelerating as we take actions to offset the impact."
On Friday, IHS Markit highlighted the major issue of supply-chain delays and longer delivery times in the euro area. There was a similar picture in the U.K., where wages and transport bills helped to push up average costs at the fastest rate since the 1990s.
In the U.S., a measure of activity at service providers settled back in July to a five-month low, reflecting businesses' persistent struggle to fill positions and stock shelves, according to data reported Friday.
Despite the inflationary danger signs brewing, the consensus view among central banks around the world is that that the inflation pickup will prove to be -- in their words -- transitory.
The European Central Bank on Thursday reinforced its pledge to keep pumping in monetary stimulus, promising not to withdraw support prematurely. In an echo of the Markit survey, central bank President Christine Lagarde also noted that bottlenecks are holding back production and that there is "a long way to go before the damage to the economy caused by the pandemic is offset."
Any signs of an enduring increase in consumer prices, especially workers demanding higher wages, would increase pressure on policymakers to dial back some of the record stimulus they unleashed in response to the pandemic. The Markit survey showed strong hiring, increasing the chance of a labor squeeze that would push up salaries.
So far, European countries haven't seen the same surge in prices for consumer goods like diapers or milk evident in the U.S. where the headline inflation rate recently topped 5%.
Yet many are warning that the reality on the ground is telling a worrying story.
"I see inflation coming from many different areas," Carlos Tavares, CEO of Jeep maker Stellantis, said this week, adding that there's a "disconnect" between what he's seeing and the views of some economists.