International Commodity Prices Transmission to Consumer Prices in Africa

In this paper, global commodity prices pass-through to consumer prices are estimated in Africa. The estimation sample includes monthly data for 48 countries over the period 2002m02-2021m04. Sixteen commodity prices are considered separately, rather than aggregate indices that use weights unrepresentative of consumption in Africa. Using local projections in a panel data set, the maximum estimated pass-through is of 23 percent, and the long-run pass-through is of about 20 percent, higher than usually found in the literature. Country-specific regressions are also considered: in the latter, the estimated pass-through is lower for countries with a higher GDP per capita, a lower share of food and energy in the consumption basket, a better quality of transport infrastructure, and a higher openness to trade. Finally, commodity-specific pass-throughs are correlated with the share of corresponding goods in the consumer basket and with the import dependency ratio for this commodity.