零售库存与通胀动态：价格利润渠道

International Finance Discussion Papers ISSN 1073-2500 (Print)ISSN 2767-4509 (Online) Number 1424 October 2025 Retail inventories and inflation dynamics: The price margin channel Neil Mehrotra, Hyunseung Oh, and Julio L. Ortiz Please cite this paper as:Mehrotra,Neil,Hyunseung Oh,and Julio L.Ortiz(2025).“Retailinventoriesandinflation dynamics:Theprice margin channel,”International Finance Discus-sion Papers 1424.Washington:Board of Governors of the Federal Reserve System,https://doi.org/10.17016/IFDP.2025.1424. NOTE: International Finance Discussion Papers (IFDPs) are preliminary materials circulated to stimu-late discussion and critical comment.The analysis and conclusions set forth are those of the authors anddo not indicate concurrence by other members of the research staff or the Board of Governors. Referencesin publications to the International Finance Discussion Papers Series (other than acknowledgement) shouldbe cleared with the author(s) to protect the tentative character of these papers. Recent IFDPs are availableon the Web at www.federalreserve.gov/pubs/ifdp/. This paper can be downloaded without charge from theSocial Science Research Network electronic library at www.ssrn.com. Retail inventories and inflation dynamics:The price margin channel∗ Neil Mehrotra†Hyunseung Oh‡Julio L. Ortiz§ October 14, 2025 Abstract Using industry-level panel data and plausibly exogenous variation in supply con-ditions, we estimate the elasticity of retail price margins with respect to inventoriesalong the retailer’s optimal pricing curve. We find that this elasticity is negative andstatistically significant, implying that lower finished-good inventories lead to higherprice margins. We assess the implications of this channel for inflation dynamics withina New Keynesian Phillips curve (NKPC) framework that links inventories to retailers’markup behavior. Incorporating the inventory-sales ratio into the NKPC markedlyimproves the model’s empirical fit and helps account for two notable recent inflationepisodes: the missing disinflation of 2009–2011 and the COVID-era surge. Keywords:Inflation; inventories; supply disruptions; Phillips curve.JEL Classification Numbers:E31, E32, E22. “Retail markups in a number of sectors have seen material increases in whatcould be described as a price-price spiral, whereby final prices have risen bymore than the increases in input prices. The compression of these markups assupply constraints ease, inventories rise, and demand cools could contribute todisinflationary pressures.” —Lael Brainard (January 2023)1 1Introduction The Phillips curve has been a key pillar of the literature on inflation and the businesscycle. Nevertheless, its empirical versions to this date leave a lot of room for improvementin accounting for inflation dynamics. In particular, the COVID-era inflation surge thatoriginated in the goods sector was not well captured by the standard Phillips curve models. In this paper, we argue that inventories—specifically, retail inventories of finished goods—play a critical role in shaping inflation dynamics through their impact on retail prices.2While the standard New Keynesian Phillips curve (NKPC) abstracts from inventories, weshow that retail inventory fluctuations offer a key missing link: they help explain why pricesrose sharply during periods of supply disruption and low inventory availability. Our approach begins with a stylized model of a retail firm that jointly chooses pricesand inventory stocks in the face of supply disruptions. We show that transitory shocks shiftthe firm’s stocking policy without directly affecting its pricing decision, thereby enablingidentification of the optimal pricing curve using instruments for inventory disruptions. Empirically, we estimate the elasticity of retail price margins with respect to inventoriesusing industry-level panel data spanning 2008q1 to 2025q1. Because pricing and stockingdecisions are jointly determined, accurately estimating this elasticity requires an identifica-tion strategy. Motivated by our stylized model, we construct two shift-share variables thatcapture plausibly exogenous transitory supply shocks. We use these shift-share variables to instrument for changes in retailers’ inventory-sales ratios. The first instrument reflects ma-terial supply shortages among upstream manufacturers from the Census Bureau’s QuarterlySurvey of Plant Capacity (QSPC). The second instrument reflects global shipping delaysbased on the Average Congestion Rate (ACR) of Bai et al. (2024). In both cases we regardsupply shifts as occurring upstream, and map them to downstream retailers using exposureshares based on a retail industry’s supply use from a given manufacturing industry. Identification with shift-share instruments can be achieved by assuming exogeneity ofeither shifts or shares (Borusyak et al., 2022; Goldsmith-Pinkham et al., 2020). Our identifi-cation rests on exogenous shifts. In our setting, the ideal experiment w