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Title: The relationship between shipping freight rates and inflation in the Euro Area
Authors: Michail, Nektarios A. 
Melas, Konstantinos D. 
Cleanthous, Lena 
Major Field of Science: Social Sciences
Field Category: Economics and Business
Keywords: Inflation;Shipping;Freight rates;Supply shock
Issue Date: Dec-2022
Source: International Economics, 2022, vol. 172, pp. 40-49
Volume: 172
Journal: International Economics 
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.
ISSN: 2110-7017
DOI: 10.1016/j.inteco.2022.08.004
Rights: © CEPII (Centre d’Etudes Prospectives et d’Informations Internationales)
Type: Article
Affiliation : Central Bank of Cyprus 
Cyprus University of Technology 
University of Western Macedonia 
Metropolitan College 
Appears in Collections:Άρθρα/Articles

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