Food prices in Scottish remote areas: are they higher than average prices?

Abstract

Since the consumer prices skyrocketed in 2007, prices have been regularly monitored to anticipate potential impact of communities’ welfare. As part of this, there have been concerns that remote communities have been particularly affected by higher prices due to the effect of higher transportation costs or even the possibility that retailers may have spatial market power. Thus, the purpose of this study is to analyse whether remote rural areas in Scotland suffer of food prices that are higher than the country’s average prices. The methodology comprised in constructing expensiveness indexes for the basket of food purchased by a household computed following Aguiar and Hurst (2007) approach and considering 2,583 households from a scanner panel dataset for 2018. These indexes were then regressed -using weighted least squares- against several socioeconomic and demographic variables. The results indicate that according to the expectation food prices paid in remote rural areas are higher than the average prices in Scotland. Younger and older people pay higher prices and being those around 40 years old who pay the least. Moreover, households with children and led by women pay lower prices. Finally, the higher the shopping intensity (in terms of trips) the lower the prices paid. These results not only have implications for rural areas but also for a growing older population.