Global Supply Chains and U.S. Import Price Inflation

Mary Amiti, Oleg Itskhoki and David Weinstein

No 20240304, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Inflation around the world increased dramatically with the reopening of economies following COVID-19. After reaching a peak of 11 percent in the second quarter of 2021, world trade prices dropped by more than five percentage points by the middle of 2023. U.S. import prices followed a similar pattern, albeit with a lower peak and a deeper trough. In a new study, we investigate what drove these price movements by using information on the prices charged for products shipped from fifty-two exporters to fifty-two importers, comprising more than twenty-five million trade flows. We uncover several patterns in the data: (i) From 2021:Q1 to 2022:Q2, almost all of the growth in U.S. import prices can be attributed to global factors, that is, trends present in most countries; (ii) at the end of 2022, U.S. import price inflation started to be driven by U.S. demand factors; (iii) in 2023, foreign suppliers to the U.S. market caught up with demand and account for the decline in import price inflation, with a significant role played by China.

Keywords: global supply chains; imports; inflation; China (search for similar items in EconPapers)
JEL-codes: E31 F14 F42 (search for similar items in EconPapers)
Date: 2024-03-04
New Economics Papers: this item is included in nep-cna, nep-int and nep-mon
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