Working Paper: CEPR ID: DP18596
Authors: Raphal Lafrogne-Joussier; Julien Martin; Isabelle Mejean
Abstract: This paper presents micro evidence on energy price shock transmission to producer prices. We analyze microdata from the French Producer Price Index (PPI) and firms' energy usage. Firms fully pass on positive energy-driven cost shocks to prices but respond more modestly to cost reductions. Despite full pass-through of positive shocks, the recent energy price surge only moderately impacted manufacturing inflation, accounting for approximately 10% of total PPI growth. This limited effect results from the relatively small share of energy in firms' variable costs. The average impact masks significant variations, primarily within industries.
Keywords: Energy prices; Passthrough; Inflation
JEL Codes: D2; E31; L60; Q43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| High inflation and increased media attention on energy prices (E31) | Passthrough rates (H29) |
| Energy price shocks (Q43) | Producer prices (P22) |
| Positive energy-driven cost shocks (Q43) | Producer prices (P22) |
| Negative energy-driven cost shocks (Q43) | Producer prices (P22) |