Food Price Inflation Convergence in the European Union: Evidence from Structural Breaks and Club Dynamics, 2005–2024

This study investigates the dynamics of food price inflation convergence among the EU27 Member States over the period 2005–2024, with a focus on the effects of structural breaks, external shocks, and regional heterogeneity. Using panel unit root tests, structural break analysis, and the Phillips and Sul club convergence methodology, the research identifies distinct patterns of convergence and divergence in food price inflation across the region. The findings reveal a lack of overall convergence, driven by persistent economic and institutional disparities among Member States. Instead, the analysis uncovers multiple convergence ‘clubs,’ highlighting clusters of countries with similar inflationary trajectories shaped by shared market structures, policy frameworks, and levels of integration. The study further identifies structural breaks corresponding to major global disruptions, such as the financial crisis, the European debt crisis, and the COVID-19 pandemic, which have exacerbated inflation disparities among Member States. While temporary alignment in inflation rates is observed during periods of acute shock, long-term convergence remains constrained by structural differences and divergent national responses. The results have significant policy implications, underscoring the need for tailored interventions to address the specific vulnerabilities of divergent groups while enhancing the coordination of fiscal and agricultural policies at the EU level. This research contributes to the literature on food price dynamics and regional integration, offering insights for policymakers who aim to foster greater market cohesion and price stability in the face of ongoing and future challenges.