Red Sea chaos risks driving up the price of goods for the global economy

The effect on inflation in Europe will be limited as markets and shipping companies adjust to the new situation, according to Bloomberg Economics.

Shipping company Maersk has halted journeys in the Red Sea. Pic:Bing Guan/Bloomberg

Attacks in the Red Sea linked to the Israel-Hamas war will cause shipping delays and drive up the price of goods, bringing a new inflation risk to the economy.

Shipping companies are diverting cargoes after Iran-backed Houthi militants attacked commercial vessels plying the Red Sea. The vessels will have to sail around Africa instead of taking the shorter route through the Suez Canal.