Supply Shock Price Transmission Mechanism

When upstream commodity costs (such as energy) spike sharply, the increase transmits progressively through production and distribution stages to reach end-consumer products, triggering broad-based inflation. The speed and magnitude of transmission depend on industry structure, substitution elasticity, wage stickiness, and expectations.

Read the daily articles behind this idea on the Chinese edition.

Related principles

• → Links
  Cost Pass-Through Paradox & Demand Destruction
• → Links
  Status Ladder Effect
• → Links
  Cost Curve Arrives Early
• ↗ Extends
  Nonlinear Demand Growth & Supply Chain Lag Risk
• → Links
  Sticky Inflation
• → Links
  Strategic Asymmetry of Resource Reserves vs. Production Capacity
• ↺ Counters
  Tool Leverage Effect
• → Links
  Cost Pass-Through and Concentration Flywheel