Researchers at the Dallas Federal Reserve Bank dismissed fears that persistent high oil prices could lead to persistently high inflation over the coming years, noting that “analysis suggests that these concerns have been overstated.”
According to the researchers rapidly rising inflation in 2021 reflected the recovery of demand, tight labor markets, supply chain disruptions and the energy prices regaining ground after pandemic lows.
“There are growing worries among policymakers and analysts that further, substantial oil price increases could push U.S. inflation higher for extended periods as well as drive up consumers’ inflation expectations, as rising oil prices are reflected in retail gasoline prices,” write the report’s authors Lutz Kilian and Xiaoqing Zhou.
The analysts note however that according to its scenarios about 3% of the annual inflation increase in 2021 can be attributed to gasoline price shocks, but only 0.2% in 2022 and 0.1% in 2023.
According to the analysts 50% of the cost of gasoline production stems from the cost of oil.
(By Feike de Jong)