Fed: Supply Chain Index Falls to 1.25

Overview

The Federal Reserve Bank of New York reported that the Global Supply Chain Pressure Index (GSCPI) declined to 1.25 in June 2026, down from a revised 1.81 in May.

Historical Context

The June reading mirrors levels observed in late 2022, when economies were still coping with COVID‑19 disruptions, and sits just below the December 2022 figure while remaining far beneath the 4.44 peak recorded in December 2021.

Drivers of the Decline

Recent easing of disruptions linked to the Middle East war contributed to the improvement. The conflict had previously halted goods and energy transit through the Strait of Hormuz, intensifying inflationary pressures. As the war moves toward resolution, some transit has resumed, prompting economists and Fed officials to anticipate a gradual reduction in inflation pressures.

Policy Commentary

New York Fed President John Williams cautioned that, despite the easing, inflation remains “unquestionably elevated and well above” the 2 % target, as stated in his June 25 speech.

Implications

The reduction in supply‑chain stress provides the Federal Reserve with additional leeway to address price stability, though elevated inflation continues to pose a risk.