Supply chain issues are causing inflation, former Home Depot CEO says

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Supply chain issues are causing inflation, former Home Depot CEO says

There is an inflation that is spilling into all parts of the economy, with one main reason being ongoing supply chain constraints.

Inflation is inseparable and is linked to the supply chain, the former Home Depot CEO Bob Nardelli told Yahoo Finance Live that there were well over 550 ships floating on the water waiting to be unloaded. There are an equal number of tankers floating on the water ready to be unloaded. The pandemic caused a perfect storm to disrupt supply chains, including port backups, container shortages, and other supply chain nightmares, and left retailers and brands at the mercy of forces outside their control.

The supply chain has caught every company off guard, and I just don't see it getting better, Nardelli said. I think we're in for a long, rough patch, certainly through the balance of the year until we get stability back in the supply chain. China holds the cards for the global supply chain as a severe COVID 19 lockdown in Shanghai lasts more than two months may be coming to an end.

A fifth of the world's container ships are stuck in congested ports, and a quarter of them are in Chinese ports, according to Windward data. The number of container vessels waiting outside Chinese ports has risen by 195% since February.

The research firm Resilinc found that shipping one container from China to the West Coast now costs twice as much as it did a year ago, with 344 ships stuck at the Shanghai port, a 34% increase since March.

If you think about the city they shut down in China, you got 26 million people, the fourth-largest port in the world, and we're not moving product out of the supply chain, Nardelli said. There is a real challenge to our economy or business here in the world. I've never seen the challenges for a CEO bigger than they are today. The broad range of constituents that they have to satisfy is unbelievable. Unbelievable to date. Home Depot HD seems to be weathering these challenges surprisingly well. The home improvement retail giant reported better than expected earnings. The company's sales rose by nearly 4% from a year ago to $38.9 billion and were the highest-ever for the first quarter in the company's history, current CEO Ted Decker said on the earnings call.

After a strong start, Home Depot expects revenue to increase 3% this year. The average spending per transaction grew faster than Home Depot expected due to inflation across several product categories, including core commodities like lumber and building materials.

It is not a quarterly thing. It's every day.