How soaring shipping costs raise prices around the world
Infrastructure - MARCH 29, 2022

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How soaring shipping costs raise prices around the world

by Andrea Zander

The cost of shipping a container on the world’s transoceanic trade routes increased sevenfold in the 18 months following March 2020, while the cost of shipping bulk commodities spiked even more, according to International Monetary Fund’s March 28 blog post.

The inflationary impact of those higher costs is poised to keep building through the end of this year.

Data from 143 countries over the past 30 years show that shipping costs are an important driver of inflation around the world: when freight rates double, inflation picks up by about 0.7 percentage points. Most importantly, the effects are quite persistent, peaking after a year and lasting up to 18 months. This implies that the increase in shipping costs observed in 2021 could increase inflation by about 1.5 percentage points in 2022.

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