Common Shocks, Uncommon Effects: Food Price Inflation across the EU Report as inadecuate

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Against the backdrop of recent price spikes on world commodity markets, retail food inflation hasvaried considerably across EU Member States despite the existence of a range of common policiesand, for some Member States, a common currency. In this paper, we investigate the extent andpotential causes of the differences in the experience of food inflation through the lens of a single welldefinedproduct chain in 11 EU Member States. Using a structural VAR framework, we find that thecontribution of world prices to the behaviour of retail bread prices shows significant differencesacross the EU Member States we cover. Differences in the functioning of the food sector (particularlybarriers to competition and vertical control) appear to be correlated with the role played world prices,highlighting the importance of such structural features in commodity price transmission.

Keywords: Food Inflation ; Structural Vector Autoregressive Models ; Commodity Pass-Through

Subject(s): Food Consumption/Nutrition/Food Safety

Food Security and Poverty

Issue Date: 2015

Publication Type: Conference Paper/ Presentation

PURL Identifier:

Total Pages: 29

JEL Codes: C32; E31; Q02

Record appears in: International Association of Agricultural Economists (IAAE) > 2015 Conference, August 9-14, 2015, Milan, Italy

Author: Lloyd, Tim ; McCorriston, Steve ; Zvogu, Evious



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