SUPPLY CHAIN DISRUPTIONS AND INFLATION DYNAMICS IN SIERRA LEONE: EVIDENCE FROM FREIGHT AND COMMODITY PRICE SHOCKS

Tommy Peter Alimamy Harding Breems

Abstract


This study investigates the role of global supply chain disruptions in shaping inflation dynamics in Sierra Leone, with particular emphasis on freight costs as a transmission channel. As a highly import-dependent economy, Sierra Leone is especially vulnerable to external shocks, including exchange rate fluctuations, global commodity price movements, and rising shipping costs. Using monthly data from 2006 to 2024, the study employs an Autoregressive Distributed Lag (ARDL) model to estimate both short-run and long-run relationships, complemented by a Structural Vector Autoregression (SVAR) framework to analyse dynamic shock transmission. The results confirm the existence of a stable long-run relationship between inflation and its key determinants. Exchange rate depreciation emerges as the most significant driver of inflation, reflecting strong pass-through effects. Importantly, the findings reveal that a country-adjusted freight cost index—constructed by interacting global freight rates with Sierra Leone’s import dependence—is a statistically significant and economically meaningful determinant of inflation. The magnitude of the freight cost effect is comparable to that of global food and oil prices, highlighting the increasing importance of logistics costs in domestic price formation. SVAR-based impulse response functions show that freight cost shocks have persistent effects on inflation, peaking several months after the initial shock and dissipating slowly. Variance decomposition results further indicate that external shocks, particularly exchange rate and freight cost disturbances, account for a substantial share of inflation variability. On the whole, the study demonstrates that inflation in Sierra Leone is increasingly driven by global supply chain conditions. The findings suggest that effective inflation management requires not only monetary and exchange rate policies but also structural interventions aimed at improving trade logistics and reducing import dependence.

 

JEL: E31, F41, L91, Q02, R41


Keywords


inflation; freight costs; exchange rate pass-through; supply chain disruptions; Sierra Leone

Full Text:

PDF

References


Dumbuya, I., Kanu, A. S., & Ositanwosu, C. O. (2016). Gross domestic product growth, money growth, exchange rate and inflation in Sierra Leone. Journal on Innovation and Sustainability (RISUS), 7(2), 72–81. https://doi.org/10.24212/2179-3565.2016v7i2p72-81 (Revista PUCSP)

Jackson, E. A., Kamara, P., & Kamara, A. (2023). Determinants of inflation in Sierra Leone. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.4443790 (SSRN)

Kalonji, K. D., Gottschalk, J., & Miyajima, K. (2008). Analyzing determinants of inflation when there are data limitations: The case of Sierra Leone (IMF Working Paper No. 2008/271). International Monetary Fund. https://doi.org/10.5089/9781451871296.001 (IMF)

Kovanen, A. (2006). Why do prices in Sierra Leone change so often? A case study using micro-level price data (IMF Working Paper No. 06/53). International Monetary Fund. https://doi.org/10.5089/9781451863130.001 (IMF)

United Nations Conference on Trade and Development. (2022). Review of maritime transport 2022. United Nations. https://unctad.org/publication/review-maritime-transport-2022

Dumbuya, I., Kanu, A. S., & Ositanwosu, C. O. (2016). Gross domestic product growth, money growth, exchange rate and inflation in Sierra Leone. Journal on Innovation and Sustainability (RISUS), 7(2), 72–81. https://doi.org/10.24212/2179-3565.2016v7i2p72-81

Food and Agriculture Organization. (2023). FAO Food Price Index. Rome: FAO. https://www.fao.org/worldfoodsituation/foodpricesindex

International Monetary Fund. (2022). World Economic Outlook: War sets back the global recovery. Washington, DC: IMF. https://www.imf.org

International Monetary Fund. (2023). Sierra Leone: Article IV Consultation Staff Report. Washington, DC: IMF. https://www.imf.org

Kalonji, K. D., Gottschalk, J., & Miyajima, K. (2008). Analyzing determinants of inflation when there are data limitations: The case of Sierra Leone (IMF Working Paper No. 08/271). International Monetary Fund. https://www.imf.org

Kovanen, A. (2006). Why do prices in Sierra Leone change so often? A case study using micro-level price data (IMF Working Paper No. 06/53). International Monetary Fund. https://www.imf.org

United Nations Conference on Trade and Development. (2022). Review of maritime transport 2022. Geneva: UNCTAD. https://unctad.org/publication/review-maritime-transport-2022

World Bank. (2024). Global Economic Prospects. Washington, DC: World Bank. https://www.worldbank.org

Jackson, E. A., Kamara, P., & Kamara, A. (2023). Determinants of inflation in Sierra Leone. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.4443790




DOI: http://dx.doi.org/10.46827/ejefr.v10i4.2246

Refbacks

  • There are currently no refbacks.


Copyright (c) 2026 Tommy Peter Alimamy Harding Breems

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

The research works published in this journal are free to be accessed. They can be shared (copied and redistributed in any medium or format) and\or adapted (remixed, transformed, and built upon the material for any purpose, commercially and\or not commercially) under the following terms: attribution (appropriate credit must be given indicating original authors, research work name and publication name mentioning if changes were made) and without adding additional restrictions (without restricting others from doing anything the actual license permits). Authors retain the full copyright of their published research works and cannot revoke these freedoms as long as the license terms are followed.

Copyright © 2016 - 2026. European Journal of Economic and Financial Research (ISSN 2501-9430) is a registered trademark of Open Access Publishing Group. All rights reserved.

This journal is a serial publication uniquely identified by an International Standard Serial Number (ISSN) serial number certificate issued by Romanian National Library. All the research works are uniquely identified by a CrossRef DOI digital object identifier supplied by indexing and repository platforms. All the research works published on this journal are meeting the Open Access Publishing requirements and standards formulated by Budapest Open Access Initiative (2002), the Bethesda Statement on Open Access Publishing (2003) and  Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities (2003) and can be freely accessed, shared, modified, distributed and used in educational, commercial and non-commercial purposes under a Creative Commons Attribution 4.0 International License. Copyrights of the published research works are retained by authors.