Supply Chain Disruptions and Inflation During COVID-19

Abstract

input costs to producers—increased substantially during the COVID-19 pandemic, and this increase was heterogeneous across industries. The manufacturing sector was, on average, more severely hit than services. There was also large heterogeneity within the manufacturing sector itself: Coke and petroleum, basic metals, and wood products have seen the highest price increases, whereas computer equipment and other transport equipment experienced the lowest price increases (Figure 1). What factors contributed to the rapid increase in PPI inflation and the large industry heterogeneity? Authors Santacreu and LaBelle explore this question in detail in their 2022 article for the Federal Reserve Bank of St. Louis Review.1 This essay summarizes their main findings and examines the challenges ahead for supply chains and PPI inflation. Supply Chain Disruptions and Inflation During COVID-19