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Energy cost pass-through and the rise of inflation: Evidence from French manufacturing firms

Author

Listed:
  • Lafrogne-Joussier, Raphael
  • Martin, Julien
  • Mejean, Isabelle

Abstract

This paper presents micro evidence on energy price shock transmission to producer prices. We analyze microdata from the French Producer Price Index (PPI) and firms' energy usage. Firms fully pass on positive energy-driven cost shocks to prices but respond more modestly to cost reductions. Despite full pass-through of positive shocks, the recent energy price surge only moderately impacted manufacturing inflation, accounting for approximately 10% of total PPI growth. This limited effect results from the relatively small share of energy in firms' variable costs. The average impact masks significant variations, primarily within industries.

Suggested Citation

  • Lafrogne-Joussier, Raphael & Martin, Julien & Mejean, Isabelle, 2023. "Energy cost pass-through and the rise of inflation: Evidence from French manufacturing firms," CEPR Discussion Papers 18596, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18596
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    More about this item

    Keywords

    Energy prices; Pass-through; Inflation;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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