Shipping Costs and Inflation

The Covid-19 pandemic has disrupted global supply chains, leading to shipment delays and soaring shipping costs. We study the impact of shocks to global shipping costs-measured by the Baltic Dry Index (BDI)-on domestic prices for a large panel of countries during the period 1992-2021. We find that s...

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Bibliographic Details
Main Author: Carriere-Swallow, Yan
Other Authors: Deb, Pragyan, Furceri, Davide, Jimenez, Daniel
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2022
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:The Covid-19 pandemic has disrupted global supply chains, leading to shipment delays and soaring shipping costs. We study the impact of shocks to global shipping costs-measured by the Baltic Dry Index (BDI)-on domestic prices for a large panel of countries during the period 1992-2021. We find that spikes in the BDI are followed by sizable and statistically significant increases in import prices, PPI, headline, and core inflation, as well as inflation expectations. The impact is similar in magnitude but more persistent than for shocks to global oil and food prices. The effects are more muted in countries where imports make up a smaller share of domestic consumption, and those with inflation targeting regimes and better anchored inflation expectations. The results are robust to several checks, including an instrumental variables approach in which we instrument changes in shipping costs with an indicator of closures of the Suez Canal
Physical Description:49 pages
ISBN:9798400204685