Bank of Lithuania
October 20 10:30 - 12:00


This paper presents novel micro evidence on the transmission of energy price shocks to producer prices. We use micro-level data from the French Producer Price Index (PPI) combined with information on firms’ energy consumption. Firms fully pass positive energy-driven cost shocks to their prices, but price responses to downward cost shocks are limited. Despite full pass-through of positive shocks, the recent energy price surge had a modest direct impact on manufacturing inflation, contributing approximately 2 percentage points to PPI growth. This limited effect can be attributed to the relatively small share of energy in firms’ variable costs. The average impact conceals significant heterogeneity, mainly within industries. For firms highly exposed to energy shocks, price increases exceeded 10 percentage points between January 2021 and December 2022.

Presenter: Julien Martin (University of Quebec in Montreal and CEPR)

Title: “Energy cost pass-through and the rise of inflation: Evidence from French manufacturing firms”

Last update: 12-10-2023