Just when it seemed inflation was being brought under control, particularly in terms of input costs for businesses like energy and labour, events thousands of miles away are threatening to send prices back up again.

While they may seem to have nothing to do with UK consumers or investors, together a drought in Central America and an increase in the terror threat in the Middle East could rekindle inflation expectations.

The authority which operates the Panama Canal reports the region has experienced its driest October since at least 1950 due to the El Niño weather system.

During the first week of December, around 170 ships used the canal compared with 238 last year, according to Marine Traffic, and from February the number of ships using the 80 kilometre canal will be reduced to just 18 per day after the authorities cut the number of crossings for the first time.

Rolf Habben Jensen, chief executive of Hapag Lloyd AG (HLAG:ETR), the world’s fifth-largest container ship owner, called the drought ‘a serious concern’ in a Financial Times article.

The firm has diverted more than 40 ships from Panama to the Suez Canal, more than 11,000 kilometres away, for trade between the east coast of the USA and Asia.

However, missile attacks on commercial vessels and a drone attack on a US warship in the Red Sea last week by Yemen-based Houthi rebels have seriously escalated tensions and raised concerns over the safety of shipping using the Suez Canal.

‘If the passage through the Suez would become more difficult, that would cause serious problems,’ Habben Jensen is quoted as saying.

According to trade analysis group MDS Transmodal, more than half of the world’s container shipping by volume linking Asia to North America used either the Panama or Suez canals in the three months to September.

As well as meaning a shortage of goods, which could lead to higher prices in the shops, problems using the canals are forcing up dry bulk freight rates after a long period in the doldrums.

Taylor Maritime Investments (TMI), which owns a fleet of 44 vessels, reported this week its average time charter equivalent rate per day over the six months to the end of September was above its benchmark indices, and its latest long-term charter was ‘significantly above the prevailing index rate’.

Reporting on its half-year results a month ago, chartering and shipping advisory firm Braemar (BMS) said forward dry cargo prices were ‘firming up’ and chief executive James Gundy told Shares he believes now is the time to invest in that part of the business.

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