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Global food prices and domestic inflation: some cross-country evidence

Author

Listed:
  • Davide Furceri
  • Prakash Loungani
  • John Simon
  • Susan M. Wachter

Abstract

We study the impact of global food price shocks on domestic inflation in a large group of countries. For advanced economies, a 10% increase in global food inflation raises domestic inflation by about 0.5 percentage point after a year; however, the impact has declined over time and become less persistent. The global food price shocks of the 2000s had a much bigger impact on domestic inflation in emerging and developing economies than in advanced economies. This could reflect the smaller share of food in the consumption baskets in advanced economies. We also provide evidence that inflation expectations are more anchored in advanced than in emerging economies, which could also explain the smaller impact on inflation from global food price shocks.

Suggested Citation

  • Davide Furceri & Prakash Loungani & John Simon & Susan M. Wachter, 2016. "Global food prices and domestic inflation: some cross-country evidence," Oxford Economic Papers, Oxford University Press, vol. 68(3), pages 665-687.
    • Handle: RePEc:oup:oxecpp:v:68:y:2016:i:3:p:665-687.
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    Cited by:

    1. Choi, Sangyup & Furceri, Davide & Loungani, Prakash & Mishra, Saurabh & Poplawski-Ribeiro, Marcos, 2018. "Oil prices and inflation dynamics: Evidence from advanced and developing economies," Journal of International Money and Finance, Elsevier, vol. 82(C), pages 71-96.
    2. Emre Alper & Niko A Hobdari & Ali Uppal, 2016. "Food Inflation in Sub-Saharan Africa; Causes and Policy Implications," IMF Working Papers 16/247, International Monetary Fund.
    3. Jasmien De Winne & Gert Peersman, 2016. "Macroeconomic Effects of Disruptions in Global Food Commodity Markets: Evidence for the United States," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(2 (Fall)), pages 183-286.

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