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Shipping Prices and Import Price Inflation

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Abstract

During the pandemic there have been unprecedented increases in the cost of shipping goods accompanied by delays and backlogs at the ports. At the same time, import price inflation has reached levels unseen since the early 1980s. This has led many to speculate that the two trends are linked. In this article, we use new data on the price of shipping goods between countries to analyze the extent to which increases in the price of shipping can account for the increase in U.S. import price inflation. We find that the pass-through of shipping costs is small. Nevertheless, because the rise in shipping prices has been so extreme, it can account for between 3.60 and 5.87 percentage points per year of the increase in import price inflation during the post-Pandemic period.

Suggested Citation

  • Maggie Isaacson & Hannah Rubinton, 2022. "Shipping Prices and Import Price Inflation," Working Papers 2022-017, Federal Reserve Bank of St. Louis, revised 30 Aug 2022.
    • Handle: RePEc:fip:fedlwp:94687
    DOI: 10.20955/wp.2022.017
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    1. Wei, Shang-Jin & Xie, Yinxi, 2020. "Monetary policy in an era of global supply chains," Journal of International Economics, Elsevier, vol. 124(C).
    2. Mary Amiti & Stephen J. Redding & David E. Weinstein, 2019. "The Impact of the 2018 Tariffs on Prices and Welfare," Journal of Economic Perspectives, American Economic Association, vol. 33(4), pages 187-210, Fall.
    3. Francois de Soyres & Ana Maria Santacreu & Henry L. Young, 2022. "Fiscal policy and excess inflation during Covid-19: a cross-country view," FEDS Notes 2022-07-15-1, Board of Governors of the Federal Reserve System (U.S.).
    4. Jason Dunn & Fernando Leibovici, 2021. "Supply Chain Bottlenecks and Inflation: The Role of Semiconductors," Economic Synopses, Federal Reserve Bank of St. Louis, issue 28, pages 1-2, December.
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    Cited by:

    1. Finck, David & Tillmann, Peter, 2022. "The macroeconomic effects of global supply chain disruptions," BOFIT Discussion Papers 14/2022, Bank of Finland Institute for Emerging Economies (BOFIT).
    2. Anderl, Christina & Caporale, Guglielmo Maria, 2024. "Shipping cost uncertainty, endogenous regime switching and the global drivers of inflation," International Economics, Elsevier, vol. 178(C).
    3. Finck, David & Tillmann, Peter, 2023. "The macroeconomic effects of global supply chain disruptions," IMFS Working Paper Series 178, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).

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    More about this item

    Keywords

    inflation; shipping; trade;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F15 - International Economics - - Trade - - - Economic Integration

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