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Working Paper 2025-8a

Abstract: We study how supply chain disruptions shape consumer prices. We develop a simple model showing how disruptions that cause delivery delays affect pricing through product availability, beyond standard cost pass-through, and extend it to a setting with strategic interactions across firms. Empirically, we construct a novel micro-level dataset linking shipment-level US import records from bills of lading to granular consumer prices from the Numerator panel. Using delivery shortfalls, port congestion, and import costs in a shift-share identification strategy, we estimate the pass-through of supply chain shocks to retail prices. We find sizable but incomplete pass-through: both imported-input cost shocks and delivery delays raise prices, with stronger responses when disruptions persist. Firms also raise prices when competitors face disruptions—including those that do not import directly—indicating strategic pricing spillovers. Combining these estimates with back-of-the-envelope calculations from the model, we show that such interactions substantially amplify the aggregate price effects of supply chain shocks, particularly those operating through product availability, during the pandemic.

JEL classification: E31, F14

Key words: supply chains, inflation, delivery delays, strategic interactions, pass-through, inventory

Digital Object Identifier (DOI): https://doi.org/10.29338/wp2025-08

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The authors are grateful to Valerie Nguyen, KC Pringle, and Michael Sparks for outstanding research assistance. They thank seminar and conference participants at the 2026 AEA/ASSA meetings, the University of Mississippi, Monash University, University of Melbourne, Reserve Bank of Australia, ISOT (World Bank), the SEM Conference (Georgia Tech), the Firm Dynamics and the Macroeconomy conference (Federal Reserve Bank of Atlanta), the Virtual Seminar Series in Innovation and Growth, the Federal Reserve Bank of Minneapolis, SED 2025, the BSE Summer Forum, Workshop on International Economic Networks (WIEN), Armenian Economic Association, and the System Committee on Macroeconomics, and 4th Conference on "Trade, value chains and financial linkages in the global economy" for helpful feedback. They are especially indebted to our discussants, Vanessa Alviarez, Davin Chor, Sebastian Heise, and Viacheslav Sheremirov, and to Leo Feler for support with the Numerator data. We also benefited from insightful comments by Pol Antràs, Michael McMahon, and Jon Willis. The views expressed in this paper are those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of Atlanta, the Federal Reserve System, or its staff.

Please address questions regarding content to Salomé Baslandze, Federal Reserve Bank of Atlanta and CEPR; or Simon Fuchs, Federal Reserve Bank of Atlanta.

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