Pass-Through of Wages and Import Prices Has Increased in the Post-COVID Period

Mary Amiti, Sebastian Heise, Fatih Karahan and Aysegul Sahin

No 20220823, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Annual CPI inflation reached 9.1 percent in June 2022, the highest reading since November 1981. The broad-based nature of the recent inflation readings has increased concerns that inflation may run above the Federal Reserve’s target for a longer period than anticipated. In this post we use detailed industry-level data to examine two prominent cost-push-based explanations for high inflation: rising import prices and higher labor costs. We find that the pass-through of wages and input prices to the U.S. Producer Price Index has grown during the pandemic. Both the large changes in these costs and a higher pass-through into domestic prices have contributed toward higher inflation.

Keywords: wages; import prices; inflation; Pass-through (search for similar items in EconPapers)
JEL-codes: E31 F00 (search for similar items in EconPapers)
Date: 2022-08-23
New Economics Papers: this item is included in nep-ifn, nep-int and nep-mon
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