Input shortages trigger longer inflation than shipping delays
Banque de France researchers have developed the Global Supply Chain Tension Index to separate input-production shortages from transportation disruptions. Their empirical findings show that input bottlenecks cause significantly more persistent inflationary pressures than transit delays.
A dual lens on global supply stress
The Global Supply Chain Tension Index (GSTIX) uses monthly data from 1969 onward to decompose supply-chain pressures into transportation constraints and input-production shortages.
While standard indicators track delivery times or freight rates, they fail to reveal the underlying source of friction.
Transportation disruptions, such as the 2023–24 Red Sea attacks or the 2010 Icelandic volcanic eruption, temporarily restrict the movement of goods.
In contrast, input-production disruptions, like the 1975 cobalt export halt during the Angolan Civil War, reduce the availability of critical intermediate inputs.
This distinction clarifies how different supply-side shocks propagate across international trade networks.
Transitory delays versus compounding shortages
Empirical analysis reveals striking differences in the macroeconomic persistence of each disruption type.
Transportation shocks temporarily depress industrial output, with inflation returning to baseline within two years as firms adjust shipping routes.
Conversely, input-production shortages cause lasting output losses and prolonged inflation because key inputs lack immediate substitutes.
Applied to the ongoing closure of the Strait of Hormuz, the index shows rising tensions in both transport and intermediate inputs like helium and fertilizer, threatening delayed, persistent cost pressures.
Central banks cannot ignore the source
Disaggregating supply shocks provides central bankers with a crucial diagnostic tool.
Treating all delivery delays as uniform risks misjudging how long price pressures will endure.
Monetary policy will remain vulnerable to policy errors without granular insight into input scarcity.