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The Pass-Through of Commodity Prices to Consumer Prices of Selected Products

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Abstract

This contribution analyzes the pass-through of various commodity prices to consumer prices of selected products in Austria. For this purpose, consumer price microdata for the period from 1996 to 2009 are mapped to the underlying disaggregated commodity prices. The duration and extent of the pass-through are found to vary considerably across products. While changes in crude oil prices turned out to have a quite substantial and quick effect on the consumer prices of super gasoline and diesel, the pass-through was rather weak for bread (bread rolls) and meat (beef steak). Of all products analyzed here, natural gas had the slowest price response, as its retail price is still partly government-controlled in Austria. Since the introduction of euro banknotes and coins in January 2002, the pass-through has increased significantly for most products under review, but we cannot infer a clear casual relationship from this result as other factors might also be responsible for the observed increase in the pass-through. In addition, the pass-through to retail prices is found to be stronger for cost hikes than for cost cuts for fuel and meat products (notably beef steak). This confirms the result of an asymmetric pass-through for fuel products found in earlier studies.

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File URL: http://www.oenb.at/dms/oenb/Publikationen/Volkswirtschaft/Monetary-Policy-and-the-Economy/2012/Monetary-Policy-and-the-Economy-Q1-12/chapters/mop_2012_q1_in_focus7_tcm16-246793.pdf
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Bibliographic Info

Article provided by Oesterreichische Nationalbank (Austrian Central Bank) in its journal Monetary Policy & the Economy.

Volume (Year): (2012)
Issue (Month): 1 ()
Pages: 92–104

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Handle: RePEc:onb:oenbmp:y:2012:i:1:b:7

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Keywords: pass-through; micro prices; commodity prices; consumer prices;

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  1. Nakamura, Alice O. & Nakamura, Emi & Nakamura, Leonard I., 2011. "Price dynamics, retail chains and inflation measurement," Journal of Econometrics, Elsevier, Elsevier, vol. 161(1), pages 47-55, March.
  2. Bertola, Giuseppe & Dabušinskas, Aurelijus & Hoeberichts, Marco & Izquierdo, Mario & Kwapil, Claudia, 2010. "Price, wage and employment response to shocks: evidence from the WDN survey," Discussion Paper Series 1: Economic Studies, Deutsche Bundesbank, Research Centre 2010,02, Deutsche Bundesbank, Research Centre.
  3. Friedrich Fritzer & Ernest Gnan & Walpurga Köhler-Töglhofer & Fabio Rumler & Alfred Stiglbauer, 2008. "Current Inflation Developments in Austria," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 20–47.
  4. Octavio Fernández Amador & Josef Baumgartner & Jesús Crespo Cuaresma, . "Milking the Prices: The Role of Asymmetries in the Price Transmission Mechanism for Milk Products in Austria," WIFO Working Papers, WIFO 378, WIFO.
  5. Fabio Rumler & Alfred Stiglbauer & Josef Baumgartner, 2011. "Patterns and Determinants of Price Changes: Analysing Individual Consumer Prices in Austria," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 12(3), pages 336-350, 08.
  6. Peter Berck & Ephraim Leibtag & Alex Solis & Sofia Villas-Boas, 2009. "Patterns of Pass-through of Commodity Price Shocks to Retail Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 91(5), pages 1456-1461.
  7. Berner, Eike, 2011. "Exchange rate pass-through: New evidence from German micro data," Economics Working Papers, Christian-Albrechts-University of Kiel, Department of Economics 2011,01, Christian-Albrechts-University of Kiel, Department of Economics.
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