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Common Shocks, Uncommon Effects: Food Price Inflation across the EU

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  • Lloyd, Tim
  • McCorriston, Steve
  • Zvogu, Evious

Abstract

Against the backdrop of recent price spikes on world commodity markets, retail food inflation has varied considerably across EU Member States despite the existence of a range of common policies and, for some Member States, a common currency. In this paper, we investigate the extent and potential causes of the differences in the experience of food inflation through the lens of a single welldefined product chain in 11 EU Member States. Using a structural VAR framework, we find that the contribution of world prices to the behaviour of retail bread prices shows significant differences across the EU Member States we cover. Differences in the functioning of the food sector (particularly barriers to competition and vertical control) appear to be correlated with the role played world prices, highlighting the importance of such structural features in commodity price transmission.

Suggested Citation

  • Lloyd, Tim & McCorriston, Steve & Zvogu, Evious, 2015. "Common Shocks, Uncommon Effects: Food Price Inflation across the EU," 2015 Conference, August 9-14, 2015, Milan, Italy 212055, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae15:212055
    DOI: 10.22004/ag.econ.212055
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    References listed on IDEAS

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    1. Gianluigi Ferrucci & Rebeca Jiménez-Rodríguez & Luca Onorantea, 2012. "Food Price Pass-Through in the Euro Area: Non-Linearities and the Role of the Common Agricultural Policy," International Journal of Central Banking, International Journal of Central Banking, vol. 8(1), pages 179-218, March.
    2. Porqueddu Mario & Venditti Fabrizio, 2014. "Do food commodity prices have asymmetric effects on euro-area inflation?," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 18(4), pages 1-25, September.
    3. Ciapanna, Emanuela & Rondinelli, Concetta, 2014. "Retail market structure and consumer prices in the euro area," Working Paper Series 1744, European Central Bank.
    4. Gelos, Gaston & Ustyugova, Yulia, 2017. "Inflation responses to commodity price shocks – How and why do countries differ?," Journal of International Money and Finance, Elsevier, vol. 72(C), pages 28-47.
    5. Will Martin & Kym Anderson, 2012. "Export Restrictions and Price Insulation During Commodity Price Booms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(2), pages 422-427.
    6. Stephen G Cecchetti & Richhild Moessner, 2008. "Commodity prices and inflation dynamics," BIS Quarterly Review, Bank for International Settlements, December.
    7. Juselius, Katarina, 2006. "The Cointegrated VAR Model: Methodology and Applications," OUP Catalogue, Oxford University Press, number 9780199285679.
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    Cited by:

    1. Daniel Hyun & Jacky Lee, 2023. "Variations in Pass-Through from Global Agricultural Commodity Prices to Domestic Food Inflation," Discussion Papers 2023-24, Bank of Canada.

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    Keywords

    Food Consumption/Nutrition/Food Safety; Food Security and Poverty;

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