## Shipping Costs and Inflation

_IMF Working Papers, March 25, 2022_

## Source details

**Canonical URL:** [Shipping Costs and Inflation](https://www.imf.org/en/publications/wp/issues/2022/03/25/shipping-costs-and-inflation-515144)

## Other formats

- [Markdown version](/en/publications/wp/issues/2022/03/25/shipping-costs-and-inflation-515144/index.md)
- [Structured JSON version](/en/publications/wp/issues/2022/03/25/shipping-costs-and-inflation-515144/index.json)
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## Bibliographic details
- Authors: Yan Carriere-Swallow, Pragyan Deb, Davide Furceri, Daniel Jimenez, Jonathan David Ostry
- Published: March 25, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400204685.001

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### Summary and scope
- Study period: 1992-2021.
- Global shipping costs measured by the Baltic Dry Index (BDI).
- Sample: large panel of countries (unspecified number in source text).
- Research question: impact of shocks to global shipping costs on domestic prices and inflation-related measures.

### Key findings
- Spikes in the BDI are followed by sizable and statistically significant increases in:
  - import prices,
  - PPI,
  - headline inflation,
  - core inflation,
  - inflation expectations.
- The impact of BDI shocks is similar in magnitude but more persistent than shocks to global oil and food prices.
- Effects are more muted in countries with:
  - smaller shares of imports in domestic consumption,
  - inflation targeting regimes,
  - better anchored inflation expectations.
- Results are robust to several checks, including an instrumental variables approach that instruments changes in shipping costs with an indicator of closures of the Suez Canal.

### Policy-relevant implications
- Shipping cost shocks can materially raise domestic inflation and inflation expectations, implying central banks and fiscal authorities should account for global shipping cost volatility in inflation assessments.
- Policies that reduce import dependence, strengthen inflation-anchoring (e.g., effective inflation targeting), or improve supply-chain resilience can mitigate passthrough from shipping-cost shocks to domestic inflation.

### Methodological notes and robustness
- Primary shipping-cost measure: Baltic Dry Index (BDI).
- Robustness includes an instrumental variables approach using Suez Canal closure indicators to instrument changes in shipping costs.

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- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2022/03/25/shipping-costs-and-inflation-515144_