International Monetary Fund: A galloping increase in container freight rates could increase global inflation by 1.5% in 2022
4
Apr
Over the past time, the International Monetary Fund (IMF) has tracked container shipping rates and collected data to find out the impact of high shipping costs on current global inflation.
In the most recent blog post on the IMF website: “How Soaring Shipping Costs Raise Prices Around the World,” the IMF economists note that The cost of shipping a container on worldwide transatlantic trade routes has increased sevenfold in the 18 months since March 2020. This analysis was done before the war in Ukraine but not independently of this important development, IMF officials said that the conflict is likely to exacerbate global inflation.
Studying data from 143 countries over the past 30 years, the IMF found that freight costs play a significant role in inflation around the world: When freight rates double, inflation increases. will increase by about 0.7%. Crucially, the effects of increased freight rates will be long-lasting, peaking after a year and continuing for 18 months.
This implies that a sustained increase in freight rates in 2021 could increase inflation by 1.5 percentage points in 2022, the IMF commented.
The IMF study was published at a time when regulators and politicians, especially in the US, are looking for ways to control ocean container freight rates. The research also comes at a time when many industry analysts are questioning whether the container shipping boom may have passed its peak, with all freight indexes already down. fell in March 2022, and economists say consumer demand in the West has softened somewhat as a result of rising inflation and transportation costs.
