When global energy costs travel: domestic trade network channel to firm-level inflation expectations

Global energy price shocks can destabilise inflation expectations, with profound implications for monetary policy and price stability. In this paper we investigate how energy exposure in domestic supply chains shape the transmission of global energy price shocks to firm-level inflation expectations. Using administrative microdata for Türkiye, we show that firms more reliant on energy inputs within their trade networks exhibit stronger responses in medium term consumer and producer price expectations. These effects are most pronounced among larger, more leveraged and higher-employment firms. Firms with a higher level of dependency are also more likely to revise pricing and unit cost expectations following energy price increases. Our results highlight the role of domestic supply chain energy exposures in shaping inflation dynamics in emerging markets amid global commodity fluctuations.