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Drop in Global Shipping Costs Signals Cooling Inflation, Experts Say

By January 26, 2023July 28th, 2023No Comments

The pandemic-era surge in shipping costs was a “smoking gun” that foretold the global inflation spike, and the sharp drop in maritime-freight expenses since peaking last year will contribute to an easing in price pressures, a former International Monetary Fund official said.

World container rates climbed more than sixfold by October 2021 from pre-COVID-19 levels, and the increase was “a canary in the coal mine for the persistent rise in inflation” seen in 2022, Jonathan Ostry, a professor at Georgetown University and the former acting director of the fund’s Asia and Pacific department, said in a Jan. 24 post on the fund’s website.

A study undertaken by Ostry and four colleagues examining the link between shipping costs and prices suggests that a doubling of maritime-transport expenses caused inflation to increase by roughly 0.7 percentage point.