The relationship between shipping freight rates and inflation in the Euro Area

Nektarios Michail, Konstantinos D. Melas and Lena Cleanthous

International Economics, 2022, vol. 172, issue C, 40-49

Abstract: Consumer inflation across the globe has rebounded during 2021 due to supply-side disruptions, one of which is the increase in freight costs. To elaborate on the relationship between inflation and shipping costs, we employ a Vector Error Correction Model (VECM) and use disaggregated monthly data from January 2009 to August 2021, using both constant tax and the standard price indices. Following a shock in freight rates, the most hard-hit sectors appear to be garments and major household appliances, items that have traditionally been manufactured outside the euro area. In addition, using a threshold regression methodology, we show that when freight rates rise more than $1300-$1500 per day, the sensitivity of inflation to freight changes increases.

Keywords: Inflation; Shipping; Freight rates; Supply shock (search for similar items in EconPapers)
JEL-codes: E31 R4 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S2110701722000646
Full text for ScienceDirect subscribers only

Related works:
Journal Article: The relationship between shipping freight rates and inflation in the Euro Area (2022)
Working Paper: The relationship between shipping freight rates and inflation in the Euro Area (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:inteco:v:172:y:2022:i:c:p:40-49

DOI: 10.1016/j.inteco.2022.08.004

Access Statistics for this article

International Economics is currently edited by Valerie Mignon and Marcelo Olarreaga

More articles in International Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().