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Supply Issues Account for Half of Surge in US Inflation, Study Says

Shipping containers are loaded onto trucks at the Port of Boston in Massachusetts. 

Shipping containers are loaded onto trucks at the Port of Boston in Massachusetts. 

Photographer: Allison Dinner/Bloomberg

Supply constraints, exacerbated by Russia’s war in Ukraine this year, account for about half of the surge in US inflation, with demand currently making up a third of the increase, according to new research from the Federal Reserve Bank of San Francisco. 

“These results showing that factors other than demand account for about two-thirds of recent elevated inflation highlight some risks for the economy,” Adam Hale Shapiro, an economist at the San Francisco Fed, wrote in a letter published Tuesday. “Because supply shocks raise prices and suppress economic activity, the prevalence of supply-related factors raises the risk of entering a period of low growth and elevated inflation levels.”