Aydan Dogan, Melih Firat and Aditya Soenarjo How does the use of imported inputs in production affect inflation dynamics in the UK? Over the past few decades, with the rise of global value chains (GVCs), production processes have become increasin… Read on blog or Reader Bank Underground Read on blog or Reader Global value chains and inflation: how imported inputs shape UK prices By BankUnderground on 05 September 2024 Aydan Dogan, Melih Firat and Aditya Soenarjo How does the use of imported inputs in production affect inflation dynamics in the UK? Over the past few decades, with the rise of global value chains (GVCs), production processes have become increasingly interlinked across countries and sectors. This interconnection means that firms' pricing decisions are now more influenced by foreign factors. The importance of globalisation in shaping inflation dynamics was highlighted during the supply-chain disruptions caused by the Covid-19 crisis. In a recent paper, we explore the impact of the rising share of imported intermediate goods on the UK Phillips curve. We show that UK industries with higher shares of intermediate imports from emerging market economies (EMEs) have flatter Phillips curves. Continue reading Comment

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