Articles
DOI DOI: 10.5281/zenodo.18435374

Inflation Persistence and Climate-Related Supply Shocks in Pakistan: Evidence from High-Frequency Food and Energy Prices

Aneel Salman1
  1. 1 COMSATS University Islamabad (CUI);

Abstract

Inflation persistence is central to monetary policy design because it governs
the output costs of disinflation and the speed at which shocks fade. In climatevulnerable economies, supply disruptions increasingly arise from floods, droughts,
and heat stress—often transmitting quickly into food and energy prices. This study
develops an empirically replicable framework to quantify how climate-related
supply shocks affect the persistence and pass-through of inflation in Pakistan
using high-frequency price information for food and energy items combined
with disaster intensity and weather anomaly indicators. Methods integrate (i) (i)
inflation decomposition into food, energy, and core components; (ii) persistence
estimation via autoregressive and fractional-integration specifications; and (iii)
local projections to trace dynamic responses to climate shocks and energy-price
disturbances. Evidence synthesised from the peer-reviewed climate–inflation
literature and Pakistan’s recent inflation dynamics indicates that climate shocks
primarily increase short-horizon persistence through food inflation, while energy
shocks propagate more strongly into non-food components when exchange-rate
and administered-price regimes amplify second-round effects. Comparative
analyses across event windows (flood vs. drought episodes) and price groups
(perishables vs. non-perishables; fuels vs. electricity) highlight policy-relevant
heterogeneity. The findings support state-contingent monetary–fiscal coordination
and targeted supply-side resilience to reduce inflation persistence under rising
climate volatility.

How to Cite

Salman, A. (2026). Inflation Persistence and Climate-Related Supply Shocks in Pakistan: Evidence from High-Frequency Food and Energy Prices. Transnational Academic Journal of Economics, 3(1), 40–51. https://doi.org/10.5281/zenodo.18435374
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