Unveiling the response of food inflation to the economic policy uncertainty, energy price shocks and carbon emission

PurposeThis research paper examines the impact of economic policy uncertainty, energy price shocks and carbon emissions on food inflation from a global perspective, for the period of 2001–2023.Design/methodology/approachTo calibrate the economic policy uncertainty, carbon emissions and energy price shock, we apply the economic uncertainty index of Baker et al. (2016), carbon dioxide in a million tonnes and the energy price index. Finally, to accomplish the relevant objectives, we exert the panel autoregressive distributed lag (ARDL) and panel Granger non-causality model.FindingsWe can summarise the key empirical insights from this pragmatic examination as follows: Initially, the panel ARDL outcome suggests that in the long-run, economic policy uncertainty and energy inflation positively influence food inflation. The result further reveals that a surge in economic policy uncertainty and energy inflation would lead to an increase in food prices in the long run in these panel countries. Secondly, the relevant outcome demonstrates that, in the long run, carbon emissions do not have a significant impact on food prices across the panel nation. Finally, the causality analysis concludes that there is unidirectional causality from energy inflation, carbon emissions and economic policy uncertainty to food inflation.Originality/valueThis investigation aims to add three aspects to the theme of food inflation. First of all, we endeavour to capture the presence of the underlying impact of economic policy uncertainty, energy price shock and carbon emissions on food prices. Second, current research extends the literature by employing panel data econometric analysis in the above context. Furthermore, our research is novel in that we consider carbon emissions to reveal their impact on food prices, whereas none of the previous analyses ever contemplated the impact of carbon emissions on food prices. Finally, by extending this analysis to a heterogeneous economic outlook that includes both advanced and emerging economies globally, it provides policymakers with a clear understanding of an effective strategy for managing food inflation and achieving sustainability.