It happens at multiple levels, and there's probably a bit of a delay between the supplier facing bottlenecks and the downstream price increases, but not as much

It happens at multiple levels, and there's probably a bit of a delay between the supplier facing bottlenecks and the downstream price increases, but not as much as you might expense. I have an acquaintance that runs a box factory. Their prices are way, way up this year (> 50%) despite their production and profits also hitting records. Their costs went way up as well, and their price increases are roughly proportional to their cost increases (hence cost, profit, and price all went up by similar amounts). Their cost increases are non-uniform across inputs, but paper, glue, transportation, etc. all went up by roughly similar amounts (30-100% annually). This is game theory. My acquaintance can look at his input costs and assume that all of his competitors are facing the same input costs. Hence, he raises his prices by a proportionate amount as soon as he sees the new costs, figuring that all of his competitors will run the same mental model. The new input costs serve as a Schelling Point for competitors to collude without any actual communication between them. As long as someone doesn't actively defect, the new price stands, and then it becomes the input for the next tier of suppliers (wholesalers, generally) to set prices.