The cost of shipping a container on major trade routes increased seven-fold in the 18 months following March 2020, with bulk commodity shipping costs spiking even higher. The IMF said these increases could raise inflation by 1.5 percentage points in 2022.

Studying data from 143 countries over 30 years, the IMF found that when freight rates double, inflation rises by about 0.7 percentage point. The effects peak after a year and can last up to 18 months.

Shipping costs are more volatile than fuel or food prices, and their impact on inflation is comparable to shocks in global oil and food markets. Higher shipping costs affect import prices within two months and quickly pass through to producer prices, while consumer prices peak after 12 months.

Countries that import more of what they consume, or pay higher freight costs-such as landlocked, low-income and island nations-are more vulnerable to inflation from rising shipping costs. Economies more integrated into global supply chains also face greater exposure.

The IMF said strong and credible monetary policy frameworks can help mitigate second-round effects. Anchoring inflation expectations is key to limiting the impact on core inflation measures.

The analysis predates the war in Ukraine but notes that the conflict is likely to exacerbate supply chain disruptions and prolong elevated shipping costs and their inflationary effects.