Beyond Energy: Inflationary Effects of Metals Price Shocks

by Jorge Miranda-Pinto, Andrea Pescatori, Martin Stuermer, Xueliang Wang
CEPR

The shift from fossil fuels to renewable technologies may render the global economy less oil-intensive and more metals-intensive. This column examines how metals supply shocks propagate through production networks and impact inflation. It finds that copper supply shocks have significant and persistent effects on both headline and core inflation. In comparison, oil supply shocks mostly impact headline inflation immediately. As the global economy becomes more metals-intensive, central banks need to be aware that the effect of metals price shocks on inflation could be less visible initially but more persistent.

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