Although international shipping costs are not included in import price indices, importers may pass changes in costs onto consumers in a manner that affects aggregate price growth. Kansas City Fed economists Nicholas Sly and A. Lee Smith and research associates Trenton Herriford and Elizabeth Johnson, evaluated this pass-through and found that a 15 percent increase in shipping costs leads to a 0.10 percentage point increase in core inflation after one year.

 

Further Resources

Read “How Does A Rise in International Shipping Costs Affect Inflation” by Nicholas Sly and A. Lee Smith

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