Global Food Prices and Domestic Inflation: Some Cross-Country Evidence
IMF Working Papers, June 24, 2015
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- Global Food Prices and Domestic Inflation: Some Cross-Country Evidence
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Bibliographic details
- Authors: Davide Furceri, Prakash Loungani, John Simon, Susan Wachter
- Published: June 24, 2015
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513542973.001
Summary
- This paper provides a broad brush look at the impact of fluctuations in global food prices on domestic inflation in a large group of countries.
- For advanced economies, the paper finds that these fluctuations have played a significant role over the period from 1960 to the present, but the impact has declined over time and become less persistent.
- The paper also finds that the more recent global food price shocks that occurred in the 2000s had a much bigger impact on emerging than on advanced economies.
- The larger impact on emerging economies could reflect:
- the larger share of food in the consumption baskets in emerging economies on average than in advanced economies, and
- less anchored inflation expectations in emerging economies than in advanced economies.
Key Findings and Evidence
- Time horizon: 1960 to the present (as stated for advanced economies).
- Recent shock period: 2000s (noted as producing larger impacts on emerging economies).
- Cross-country contrast:
- Advanced economies: global food price fluctuations played a significant role historically, with declining and less persistent effects over time.
- Emerging economies: more pronounced impact from 2000s global food price shocks relative to advanced economies.
- Possible mechanisms highlighted:
- Share of food in consumption baskets (larger on average in emerging economies).
- Degree of anchoring of inflation expectations (less anchored in emerging economies).
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