Food Price Inflation Research Articles

International trade and the neoliberal diet in Central America and the Dominican Republic: Bringing social inequality to the center of analysis

Scholarship on international trade and health analyzes the effects of trade and investment policies on population exposure to non-nutritious foods. These policies are linked to the nutrition transition, or the dietary shift towards meat and processed foods associated with rising overweight and obesity rates in low- and middle-income countries. We argue for expanding the trade and health literature's focus on population exposure through the concept of the neoliberal diet, which centers subnational social inequality as both an outcome of neoliberal agri-food trade policies and a determinant of dietary change. We develop this perspective through a regional analysis of non-nutritious food availability following the implementation of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), together with an extended case study, from the late 1990s to the present, of household expenditure and food price changes in the Dominican Republic, the region's largest food importer. Our analysis demonstrates that low-income consumers face increasing household food expenditures in a context of overall food price inflation, in addition to relatively higher price increases for healthy versus ultraprocessed foods. Neoliberal policies not only contribute to restructuring the availability and pricing of healthy food for low-income consumers, but they also exacerbate social inequality in the food system through corporate-controlled supply chains and farmer displacement. Our findings support policy proposals for socially distributive forms of healthy food production to stem the negative effects of the nutrition transition.

Biofuel impact on food prices index and land use change

Food price and land use data over an extended time period have been examined to identify possible correlations between biofuel production and food price or land use changes. We compared the food price index before and after the biofuel boom in the 2000s to evaluate biofuel's impact on the inflation rate. We found that the U.S. food price inflation rate since 1973 could be divided into three distinct regions. The inflation rate was lowest at 2.6% during 1991–2016, which encompasses the biofuel boom. Among many factors, continuously rising food production per capita was identified as the likely cause of low food price inflation during this period. The US exports of corn have not declined since the 1990s and soybean exports are rising at a steady rate. Among several variables tested as a cause of food price index increase, crude oil price had the highest correlation. We also manually verified the automated land use classification of satellite image covering 664 km2 in three selected areas in the US. We found that 10.90% of non-agricultural land was misclassified as agriculture, whereas only 2.23% of agricultural land was misclassified as non-agricultural. The automated classification showed an 8.53% increase in agricultural land from 2011 to 2015, while the manual classification showed only 0.31% (±1.92%) increase. This result was within the margin of error alluding to no significant land use change. We concluded that automated satellite image land use classification should be verified more rigorously to be used for land use change analysis.

Transforming urban food systems in South Africa: unfolding food sovereignty in the city

ABSTRACTThis paper illuminates how urban food producers contribute to the construction of food sovereignty in less-expected urban settings in the Global South. In South Africa, jobless de-agrarianisation, apartheid legacy, and rapid food price inflation are shaping the realities of marginalised urban inhabitants. Urban food movements have been critically observing these developments and have begun to raise their voices against social inequality. In this way, they offer a fertile ground to put food sovereignty into practice. While food sovereignty has become a globalised vision, it has been adapted in specific contexts to address issues ranging from the struggle against corporate power to self-determination in the agri-food system. Drawing on research conducted on an urban agriculture movement in George, Western Cape, this contribution provides a sketch of the way people propose alternative visions about the organisation of food and land grounded in everyday life.

Escalating food security status in Gujrat State of India

By using district-level secondary data, 2016 and indicator approach, the present study has developed a food security index for the districts associated with the State of Gujarat, India. The calculated FSI revealed that Ahmadabad district has the highest food security status, whereas Porbandar district has the lowest food security status. The estimated results show that there exists a significant food inequality across districts due to variation in socioeconomic variables. The study suggests that (i) creation of more job opportunities in non-farm would be critical to improve accessibility power of people to acquire food, (ii) food security would be sustainable as increase government expenditure in agriculture and rural development, public spending in agriculture and R &D, development of infrastructure and food-grain storage, and credit flow in the market (iii), and the government of India is required to adopt an effective mechanism to reduce marketing in order to control food price inflation.

The Pass-Through of Global Food Price Inflation to Domestic Prices Inflation: Empirical Evidence from South Asia

This study investigates and assesses how the international food price surge affects domestic inflation process in South Asia. Global food price indices (GFPI) are collected from FAOSTAT website. Data for domestic prices (CPI and CFPI) are collected from CEIC website. Exchange rates for each country are collected from IMF website. The empirical statistical results are derived by using a battery of parametric and non-parametric econometric techniques using monthly data of price series for the study period, 2005M1 to 2017M12. The co-integration analysis results confirm that the global food prices and domestic prices are co-integrated. Granger–causality test reveals the unidirectional causal relationship running from global food prices to domestic prices over the study period for Pakistan and Sri Lanka. However, In the case of India, Bangladesh and Nepal, samples do not show the evidence of causal relationship in the short run. However, in the long run, GFPI Granger cause local prices in all countries. Therefore, Governments from South Asia need to develop a safety net program for the poor and a longer term poverty reduction strategy. Policy attention needs to shift towards efforts to increase food production. The results of this study have shown various policy implications for monetary policy, food and agricultural policy and trade policy for South Asia.

Examining the Friedman Hypothesis in the Case of Food Inflation: Evidence from Sri Lankan Economy

The relationship between inflation rate and inflation volatility has attracted more attention by theoretical and empirical macroeconomists. Empirical studies on the relationship between food inflation and food inflation variability is scarce in the literature. This study examines the intertemporal dynamic linkages between food price inflation and its volatility in the context of Sri Lanka. The empirical evidence derived from the monthly data for the period from 2003M1 to 2017M12 for Sri Lanka. Food price inflation is defined as log difference of food price series. The volatility of a food price inflation is measured by conditional variance generated by the FIGARCH model. Granger causality tests show that food inflation seems to exert positive impact on inflation variability. Hence, the findings of the study supports the Friedman hypothesis in both cases of consumer food price inflation and wholesale food price inflation. This implies that past information on food inflation can help improve the one-step-ahead prediction of food inflation variability but not vice versa. Our results have some important policy implications for the design of monetary policy, thereby promoting macroeconomic stability.

Assessing the effect of monetary policy on agricultural growth and food prices

Agricultural growth is closely associated with sustainable economic development. This is especially true from the perspective of developing countries, such as India and Pakistan, where significant portions of the labour force are dependent on agriculture for their livelihood. This study analysed the impact of macroeconomic policy (i.e. monetary policy) on employment, food inflation, and agricultural growth by analysing to what extent monetary policy is effective in controlling food price inflation, the effect of contractionary monetary policy on the agricultural sector’s employment and productivity, and the extent of monetary policy transmission to money market rates and 10-year interest rates. We did so by applying a factor-augmented vector autoregressive model proposed by Bernanke et al. (2005) to agricultural data from 1995 and 1996 to 2016 for India and Pakistan, respectively. We found that tight monetary policy significantly reduced food inflation and agricultural production while increasing the rural unemployment rate. Short-term and 10-year interest rates increased owing to the contractionary monetary policies pursued by both countries. An inclusive monetary policy whereby policymakers work alongside governments to achieve price stabilisation and reasonable employment rates is recommended.

DETERMINANT OF FOOD INFLATION

In this paper, we investigate the determinants of food inflation in Indonesia by applying General Method of Moments (GMM). The period of quarterly data is 2008:Q1 to 2017:Q4. The empirical finding of this study shows that backward-looking and forward-looking expectations have a strong impact on food inflation. Also, this study provided evidences that the determinants general food price inflation, such as food production, agriculture sector output, infrastructure, food import, agriculture sector credit, demand level (M1/consumption), and seasonal event (Eid Mubarak) are highly significant. Backward-looking and forward-looking expectations, domestic oil price, and level of demand have been a contributor toward high food price while the factors of general food price inflation reduce food price.
 In particular, we also identify the determinants of rice price inflation since it has the largest share in food price inflation. We found that backward-looking and forward-looking expectations, climate change, and demand have a strong impact on high rice price while production, productivity, harvested area, infrastructure, import, and credit reduce rice price.

The Commodity Futures Volatility and Macroeconomic Fundamentals - The Case of Oil and Oilseed Commodities in India

Food price inflation results in uncertainty in the food markets and reduces real income asfood covers a relatively large share of the households’ expenditures in the LDCs. As priceof food commodities are primarily governed by the underlying demand and supplyconditions, we have analyzed the association of futures price volatility with the underlyingmacroeconomic variables. A strong association of futures price volatility with theunderlying macro variables will imply that futures market operates based on theimplications of the macroeconomic policies and are not merely driven by speculativemotive. The association between futures price and the macroeconomic variables will helpin developing policies aimed at stabilizing food prices. For our study we have consideredthe five major oil and oilseed contracts traded on National Commodity and DerivativesExchange. We have considered the nearest three month contracts traded on the exchange.In our study we observe that Gross Domestic Product (GDP) and Index of IndustrialProduction (IIP) growth rate have significant impact on futures price volatility. We havealso found a significant relation between futures price volatility and inflation. Thesefindings have important implications for commodity production decision making,commodity hedging and commodity price forecasting.  

The impact of rising food prices on obesity in women: a longitudinal analysis of 31 low-income and middle-income countries from 2000 to 2014.

To examine whether changes in food prices are associated with changes in obesity prevalence among women in developing countries, and assess effect modification by individual socioeconomic status (SES). Longitudinal study of country-level food price inflation temporally and geographically linked to anthropometric data on non-pregnant adult women (n = 295,984) in 31 low-income and middle-income countries over the 2000-2014 time period, using separate multivariable multilevel growth models of five SES indicators. Post-estimation analysis computed the relationship between food price inflation and predicted mean probabilities of being obese, by SES. Rising food price inflation was strongly associated with women's obesity prevalence, and SES consistently modified the relationship. Regardless of indicator used, higher food price inflation was positively associated with obesity among women in top SES categories, but was flat or negative among women in low SES categories, averaging over time. The SES differences were widest across educational strata and were most pronounced when food price inflation was highest. Overall, for every 1-unit increase in food price inflation, predicted mean obesity prevalence was between 0.02 and 0.06 percentage points greater in women of high SES compared to low SES women. There is a strong link between food price inflation and obesity in adult women in developing countries which is clearly modified by individuals' SES. Greater food price inflation was associated with greater obesity prevalence only among women in higher SES groups, who may be net food buyers most at risk of obesity in low-income and middle-income countries.

Energy‐milk price transmission at the product brand level

AbstractThis article estimates the pass‐through rates between diesel fuel and retail milk prices at the product brand level. Using a random coefficient logit demand model and taking the direct and indirect impacts of energy prices, this research identifies changes in pass‐through rates before and after the great recession in 2008. Empirical results show that diesel prices significantly impacted the retail prices of milk products and are an important determinant of food price inflation. Pass‐through rates are estimated to range from 0.16 to approximately 0.60 through 2008 with an average of 0.22 for the whole period. Statistical tests indicate that pass‐through rates before June 2008 were significantly higher than after June 2008 when they dropped significantly to 0.04 to 0.17. Interestingly, private label brands have the lowest pass‐through rates, implying that compared to manufacturer brands, private label prices are more insulated from diesel price shocks.

Monetary Policy Transmission : Does Maintain the Price and Poverty Stability is Effective?

This study analyzes the effectiveness of monetary policy transmission of emerging market countries, both short and long-term in maintaining economic stability and reducing poverty. The main problem in this paper is that monetary transmission is incapable of controlling the economy and reducing poverty. There are five countries selected such as India, Brazil, China, Russia, and Indonesia. Long-term prediction analysis using Vector Auto Regression (VAR) model is performed to predict five emerging market countries using Regression Panel. It results suggest that monetary policy transmission affecting the number of poor people should be controlled in three stages. In the short-term, the transmission of export variables and inflation controls the number of poor people. In the medium-term, the control of the number of poor people uses variables of inflation and exports while in the long-term uses exports and Gross Domestic Product (GDP). Overall, all economic variables of emerging market countries are greatly influenced by the fluctuations of each country's exports, then by food price stability as measured by food price inflation. The result of regression panel analysis is known that the factor that most influence the poor people in emerging market country is GDP. Exports also affect poor people such as Indonesia, China, and Russia. Inflation also causes poor people like India and Brazil. The countries that have the most impact on economic fluctuations on the number of poor people are India, Indonesia, China, Brazil, and Russia.

Rational Bias in Inflation Expectations

This paper argues that individuals may rationally weight price increases for food and energy products differently from their expenditure shares when forming expectations about price inflation. We develop a simple dynamic model of the economy with gradual price adjustment in the core sector and flexible prices in the food and energy sectors. Serial correlation of supply shocks to food and energy allows individuals to gain an understanding about future shocks, possibly making it optimal for individuals to place more weight on the movement of prices in these sectors. We use survey data on expected inflation to show that the weights implied by the model differ from the expenditure shares of food and energy prices in the CPI for the United States. We find food price inflation is weighted more heavily and energy price inflation is weighted less heavily. But importantly, we cannot reject the hypothesis that these weights reflect rational behavior in forming expectations about inflation.

The Impact of an Inflation Targeting Framework on Food Price Inflation: Evidence from Developing Economies

Inflation Targeting (IT) has gained much popularity in recent years, with fifteen countries formally adopting it as a monetary policy framework since 2000. However, in developing countries, where the contribution of food prices to headline inflation is generally higher than in advanced economies, the adequacy of an IT framework for curbing inflation is very much contested. In this paper we use a difference-in-differences approach to evaluate the treatment effect of adopting IT. Controlling for reversion to the mean, we find that economies that function under an IT regime do no better than countries that use alternative policy instruments. We verify the robustness of these results using panel unit-root tests and find that food inflation rates converge across economies irrespective of the monetary policy framework implemented.

The Impact of Disasters on Inflation

This paper studies how disasters affect consumer price inflation. There is a marked heterogeneity in the impact between advanced economies, where the impact is negligible, and developing economies, where the impact can last for several years. There are also differences in the impact by type of disasters, particularly when considering inflation sub-indices. Storms increase food price inflation in the near term, although the effect dissipates within a year. Floods also typically have a short-run impact on inflation. Earthquakes reduce CPI inflation excluding food, housing and energy.

Vulnerability to Drought and Food Price Shocks: Evidence from Ethiopia

While the measurement and determinants of poverty have been widely studied, vulnerability, or the threat of future poverty, has been more difficult to investigate due to data paucity. We combine nationally representative household data with objective drought and price information to quantify and investigate causes of vulnerability to poverty in Ethiopia. Previous estimates have relied on self-reported shocks and variation in outcomes within a survey, which is inadequate for shocks such as weather and prices that vary more across time than space. We used historical distributions of climate and price shocks in each district to simulate the probable distribution of future consumption for individual households and use these quantify vulnerability to poverty. We find that many Ethiopians are unable to protect their consumption against lack of rainfall and sudden increases in food prices. A moderate drought causes a 9% reduction in consumption for many rural households and recent high inflation has caused a 14% reduction in the consumption of uneducated households in urban areas. We also find that the vulnerability of rural households is considerably higher than that of urban households, despite realized poverty rates being fairly similar. This reflects the fact that the household survey in 2011 was conducted during a year of good rainfall but rapid food price inflation. The results highlight the need for caution in using a snapshot of poverty to target programs, as underlying rates of vulnerability can be quite different from the poverty rate captured at one point in time. The results also suggest that significant welfare gains can be made from risk management in both rural and urban areas.

Regional Food Price Inflation Transmission

Understanding to what extent and speed agricultural commodity price changes on international markets are transmitted to consumers is key in assessing the vulnerability of households to price shocks. The importance of these transmission indicators is compounded, in developing countries, by the fact that consumers tend to spend a higher proportion of their income on food items. Regional estimates of food inflation transmission can also be used to predict consumer-level impacts of international price shocks, contributing to improve the information basis on which to base policy mitigation actions and to focus on the areas likely to suffer the most. The aim of this paper is to provide estimates of the transmission of price changes from international commodity markets to consumers in different regions of the world, using monthly data from FAO's Food Price Indices and Regional Food Consumer Price Indices. This econometric analysis, which uses impulse response functions from error-correction models, is useful in establishing typologies of regions with respect to the extent and speed of price transmission processes.

Structure and Food Price Inflation

Abstract We pair Nielsen TDLinx data, 2004–2014, with Consumer Price Index data to investigate how changes in food retail market structure drive food price inflation. We find, in corroboration with much of the evidence to date, that market concentration is positively and significantly associated with higher food prices. We find the same to be true for store format concentration, or the homogeneity of food markets. As the market shares, or penetration, of supercenters, warehouse stores, limited assortment stores, and superettes increase at expense of traditional supermarkets, food price inflation decreases.

Macroeconomic variables and food price inflation, nonfood price inflation and overall inflation: A case of an emerging market

The paper analyses the association between certain macroeconomic variables and food price inflation, non-food price inflation and overall inflation in Zimbabwe, and also seeks to determine the level of association between these variables, given food security implications and overall well-being of its citizens. The study reveals that during the 2010 to 2016 period, Zimbabwe experienced stable food prices—annual food price inflation for food and non-alcoholic beverages averaged a relatively low growth rate of 0.12% monthly, while non-food inflation monthly growth rate was 0.09% and overall inflation growth rate was 0.11%. Although inflation from 2010 had been declining, of late, the increase in annual inflation has been underpinned by a rise in non-food inflation. Zimbabwe’s annual inflation remains lower than inflation rates in other countries in the region. Despite the increases lately in overall inflation, it remained below zero in January 2016, mostly driven by the depreciation of the South African rand and declining international oil prices. It should also be noted that domestic demand continued to decline in 2015, leading to the observed decline in both food and non-food prices. While food inflation has remained relatively low, it should be noted that non-food expenditures is significant component of the household budget and the rising prices result often lead to declining purchasing power and force households to make difficult choices in terms of their purchases. The findings of the study are food inflation has a low association with the independent variables under study; Zimbabwe broad money supply, rand-dollar exchange rates and the South Africa food inflation. There is, however, a very strong association between non-food inflation and these independent variables, as well as between overall inflation and the independent variables. Given the mostly rural population and the high level of unemployment in Zimbabwe, it can be surmised that the distributional burden of the effects of rising non-food prices between 2009 and 2016 fell mostly on these vulnerable groups as they had the lowest disposable income. In addition, it can also be surmised that domestic production can cushion the impact of rising prices in general, particularly on food. A deliberate policy of increasing domestic food production would therefore go a long way in ensuring lower price changes of both food and non-food items.

The negative effects of food price inflation on pupils’ attainment and performance at school in Algeria

This study attempts to assess the impact of food price inflation on the loss of human capital mainly through school wastage in Algeria.
 The results obtained by means of both a theoretical investigation, and by means of a field work conducted in many parts of the country clearly indicate:
 
 For a significant percentage of families, more than half of the overall income is spent on food products.
 Food price inflation engenders on behalf of poor families considerable cuts on educational spending which negatively affect learners’ school performance.
 In the context of lack of financial support, vulnerable families have serious difficulty in keeping their children at school, and learners encounter severe handicaps in their learning acquisition process and school attainment.
 
 These very facts in turn induce high school wastage and high inefficiency of the public sector performance. The solution to such a problem requires (i) a better understanding of both parents and learners’ difficulty, and (ii) the definition of a sound scheme of material, financial help, and moral support in favor of vulnerable families and pupils.