Food price inflation convergence: an international study from 2000–2020

Abstract

PurposeThe purpose of this paper is to investigate the food price inflation convergence across countries and regions. This study aims to identify the key drivers for food price inflation across countries and regions.Design/methodology/approachWe test whether the international food price inflations are converging over time using the log t convergence test and clustering analysis. These inflation data are collected from the Food and Agriculture Organization of the United Nations.FindingsThe test results suggest that there is little evidence of overall convergence. Then we utilize a clustering algorithm and the results support that there is strong evidence of multiple convergence clubs. In addition, we examine the transition path of the various convergence and find that social stability regulation together with economic conditions are important determinants of convergence club membership.Research limitations/implicationsFirst off, local conflict and economic environment result in food supply and prices, but this study is limited to the dynamics of prices.Practical implicationsFood prices inflations are not converging to single common price inflation, but there exist subgroups of countries or regions within which food price inflation tends to converge. These groupings tend to be related to the economic development and social stability of countries and regions.Social implicationsThe authors believe that any analysis of food price inflations that does not consider the political environment and economic conditions dynamics will likely be omitting important components of food price dynamics.Originality/valueThis study uses a unique data set covering 198 countries and regions and provides a comprehensive analysis of international food price inflation convergence identifying the key drivers of convergence club membership.