Material shortages have a negative impact on industrial production and lead to a permanent increase in prices, a new study by the Munich-based "Ifo" institute shows, quoted by BTA.
According to the study, unplanned material shortages lead to a short-term decline in industrial production by 2.4 percent.
“Unexpected disruptions to supply chains can put significant pressure on companies and the economy. Consumers feel the consequences for a particularly long period, as prices continue to rise even years after the shortages occur“, says "Ifo" researcher Lara Zaarges.
According to the study, the strongest decline in production is observed in the automotive industry. The most significant price effects are reported in the woodworking and pharmaceutical industries.
Increasing material shortages lead to an immediate slowdown in production, with recovery to previous levels occurring gradually after supplies normalize.
“A short-term improvement in material availability is not enough to compensate for production losses“, points out the researcher from the Friederike Fournet Institute.
Two years after a negative shock related to material shortages, industrial production remains 0.5 percent below the level that would have been reached in the absence of such a shock.
Producer and raw material prices reach their highest increase approximately a year after the shortages occur – around 0.3 percent for producer prices and 0.6 percent for raw materials, respectively.
The impact on consumer prices is the longest-lasting. Even two years after the material shortages began, consumer prices rose by about 0.1 percentage points per quarter.
The authors of the study used the monthly business surveys of the "Ifo" institute among manufacturing companies for the period from 2002 to mid-2025. Between 2,000 and 5,000 companies participate in the survey each month.
The study focuses on unexpected and short-term shocks caused by material shortages. Their impact on industrial production, the producer price index, the raw material price index and the consumer price index was analyzed.