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Are International Food Price Spikes the Source of Egypt’s High Inflation?

In: Financial Integration

Author

Listed:
  • Sherine Al-Shawarby

    (Cairo University and World Bank)

  • Hoda Selim

    (Economic Research Forum)

Abstract

This paper examines whether domestic inflation spikes in Egypt during 2001–2011 were primarily the result of external food price shocks. To estimate the pass-through of international food price inflation to domestic price inflation, two different methodologies are used: a two-step regression model estimates the pass-through in the long run, and a VAR model provides the short-run estimates. The empirical evidence confirms that pass-through is high in the short term, but not in the long run. More precisely, our results show that (1) Long-run pass-through to domestic food inflation is relatively low, lying between 13 % and 16 %, while the long-term spill-over from domestic food inflation to core inflation is moderate, lying around 60 %; (2) In the short-term, pass-through is relatively high, estimated around 29 % after 6 months and around two-thirds after a year, but the spill-over effect to core inflation is limited; (3) international food price shocks explain only a small portion of domestic inflation shocks in both the short and long terms; and (4) international price inflation has asymmetric effects on domestic prices.

Suggested Citation

  • Sherine Al-Shawarby & Hoda Selim, 2013. "Are International Food Price Spikes the Source of Egypt’s High Inflation?," Financial and Monetary Policy Studies, in: Marga Peeters & Nidal Sabri & Wassim Shahin (ed.), Financial Integration, chapter 0, pages 61-83, Springer.
    • Handle: RePEc:spr:fimchp:978-3-642-35697-1_4
    DOI: 10.1007/978-3-642-35697-1_4
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    Cited by:

    1. Mora Barrenechea, Mauricio, 2020. "Time-varying effects of commodities prices in the Bolivian economy," MPRA Paper 104706, University Library of Munich, Germany.
    2. Ibrahim AWAD, 2013. "Challenges For Adopting Inflation Targeting Regime In Egypt," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 11, pages 59-81, June.
    3. Amr Hosny, 2013. "Inflation in Egypt: Internal or External Driven?," Middle East Development Journal, Taylor & Francis Journals, vol. 5(3), pages 1350019-131, January.
    4. Türken Fatma & Yildirim Mustafa Ozan, 2024. "Second-round effects of food prices on core inflation in Turkey," Economics and Business Review, Sciendo, vol. 10(4), pages 32-55.
    5. Imed Medhioub & Mustapha Chaffai, 2021. "Herding behaviour theory and oil price dispersion: a sectoral analysis of the Gulf Cooperation Council stock market," Journal of Asset Management, Palgrave Macmillan, vol. 22(1), pages 43-50, February.
    6. Moayad Al Rasasi & Hussain Alramadan, 2025. "The Asymmetric Effects of Global Food Prices on Domestic Prices in Saudi Arabia," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 31(1), pages 1-13, May.
    7. Mounir El-Karimi & Ahmed El-Ghini, 2020. "The Transmission of Global Commodity Prices to Consumer Prices in a Commodity Import-Dependent Country: Evidence from Morocco," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 67(1), pages 15-32, March.
    8. Ginn, William & Pourroy, Marc, 2020. "Should a central bank react to food inflation? Evidence from an estimated model for Chile," Economic Modelling, Elsevier, vol. 90(C), pages 221-234.
    9. Misati, Roseline Nyakerario & Munene, Olive, 2015. "Second Round Effects And Pass-Through Of Food Prices To Inflation In Kenya," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 3(3), pages 1-13, July.

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