Decoded No. 22: Who Absorbs the Shock (full note, PDF)

Decoded, analysis note No. 22. Driss EFFINA, PhD. October 2026. PDF, 26 pages, 14 charts and diagrams, 8 tables.

Every energy shock is a loss of real income that someone has to carry. Firms can pass the higher cost of energy into their selling prices, in which case households pay through inflation, or they can absorb it in their margins, in which case owners, workers and investment pay later. This note measures that split for the United States, the United Kingdom, France, Germany and Canada in the 2026 shock, which began with the war involving Iran at the end of February and took Brent from 69 dollars a barrel on average in 2025 to 117 dollars in April and 127 dollars in October 2026.

Inside the full note:

• Framework: four channels and three measures
• The 2026 shock in numbers
• Decomposing domestic prices, 2019 to mid-2026
• 2022 versus 2026: a different kind of shock
• Inside profits: levels, energy winners and energy users
• Pass-through ratios by country and sector
• What firms say, and how they choose
• The margin cushion: how much shock can firms still absorb?
• Scenarios to the end of 2027
• A dashboard of leading indicators
• Implications for policy, investors and households
• What to watch

Read the free preview: Who Absorbs the Shock.