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Measuring the Inflationary Effects of Agricultural Supply News Shocks

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  • Jo, Jungkeon
  • Adjemian, Michael

Abstract

Identifying the causal effect of agricultural production conditions on food prices is challenging because commodity prices respond simultaneously to supply and demand shocks. Exploiting high-frequency field crop futures prices and USDA crop reports, we estimate impacts of agricultural supply news shocks on food markets. A poor harvest news shock that raises field crop prices leads to an increase in food-at-home and food service prices, a decline in food expenditures. Using household-level food price indexes constructed across income quintiles, we find that welfare losses are approximately seven times larger for the lowest-income quintile than for the highest. Counterfactual simulations indicate that, without these shocks, U.S. food inflation during 2021-23 would have peaked up to 1.9 percentage points lower.

Suggested Citation

  • Jo, Jungkeon & Adjemian, Michael, 2026. "Measuring the Inflationary Effects of Agricultural Supply News Shocks," 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri 404421, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea26:404421
    DOI: 10.22004/ag.econ.404421
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    File URL: https://ageconsearch.umn.edu/record/404421/files/177494_182473_115232_AgNewsOnFood_AAEA2026.pdf
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