Food Inflation in Sub-Saharan Africa : Causes and Policy Implications

Author/Editor:

Ali Uppal ; Emre Alper ; Niko A Hobdari

Publication Date:

December 22, 2016

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper analyzes food inflation trends in Sub-Saharan Africa (SSA) from 2000 to 2016 using two novel datasets of disaggregated CPI baskets. Average food inflation is higher, more volatile, and similarly persistent as non-food non-fuel (NF/NF) inflation, especially in low-income countries (LICs) in SSA. We find evidence that food inflation became less persistent from 2009 onwards, related to recent improvements in monetary policy frameworks. We also find that high food prices are driven mainly by non-tradable food in SSA and there is incomplete pass-through from world food and fuel prices and exchange rates to domestic food prices. Taken together, these finding suggest that central banks in low-income countries with high and persistent food inflation should continue to pay attention to headline inflation to anchor inflation expectations. Other policy levers include reducing tariffs and improving storage and transport infrastructure to reduce food pressures.

Series:

Working Paper No. 16/247

Subject:

English

Publication Date:

December 22, 2016

ISBN/ISSN:

9781475563115/1018-5941

Stock No:

WPIEA2016247

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

40

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