The relation of ocean freight prices to inflation

If shipping costs continue to increase, higher import costs may put additional upward pressure on core inflation, even if typical import price indices remain low, affecting consumers in the long term.

April 02, 2017

Ten

Ten Magazine

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

Read "Global Supply Chain Disruptions Can Be Seen Anywhere, but Their Costs Are Not the Same Everywhere" by Nicholas Sly and Anson Soderbery

Comments/questions are welcome and should be sent to teneditors@kc.frb.org.

Additional Resources

A Varied Picture: While downtown office use has declined, some metro areas fare better than others

Research shows that while downtown office use has declined, some metropolitan areas have fared better than others.

From the Vault: Kansas City Fed History

Starting in 1961, amid the Cold War and global concerns about nuclear threats, the Bank rented underground storage vaults and...

Helping Hands: Bank employees help build housing in the community

In May, 16 volunteers from the Bank’s head office worked on home-building projects through Habitat KC, a regional arm of...

We don't just go to work, we go to serve.