World commodity prices and domestic retail food price inflation: some insights from the UK

James Davidson, Andreea Halunga, Tim Lloyd, Steve McCorriston, Wyn Morgan

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

We focus on two aspects of the links between world commodity prices and retail food price inflation: first, the effects of exchange rates and other input costs, and second; the effects of the duration of shocks on world commodity markets, not just the magnitude of price spikes (the latter often commanding most attention). The UK offers a natural and rather unexplored setting for the analysis. Applying time series methods to a sample of 259 monthly observations over the 1990(9)-2012(3) period we find substantial and significant long-term partial elasticities for domestic food price inflation with respect to world food commodity prices, the exchange rate and oil prices (the latter indirectly via a relationship with world food commodity prices). Domestic demand pressures and food chain costs are found to be less substantial and significant over our data period. Interactions between the main driving variables in the system tend to moderate rather than exacerbate these partial effects. Furthermore, the persistence of shocks to these variables markedly affects their effects on domestic food prices.

LanguageEnglish
Pages566-583
JournalJournal of Agricultural Economics
Volume67
Issue number3
Early online date24 May 2016
DOIs
StatusPublished - Sep 2016

Fingerprint

commodity prices
food prices
inflation
Economic Inflation
Food
input costs
Shock
elasticity (mechanics)
food chain
products and commodities
time series analysis
Costs and Cost Analysis
Food Chain
Inflation
Retail
Food prices
Commodity prices
Elasticity
markets
oils

Keywords

  • Food prices
  • Inflation
  • Price transmission
  • VAR models

Cite this

World commodity prices and domestic retail food price inflation : some insights from the UK. / Davidson, James; Halunga, Andreea; Lloyd, Tim; McCorriston, Steve; Morgan, Wyn.

In: Journal of Agricultural Economics, Vol. 67, No. 3, 09.2016, p. 566-583.

Research output: Contribution to journalArticle

Davidson, James ; Halunga, Andreea ; Lloyd, Tim ; McCorriston, Steve ; Morgan, Wyn. / World commodity prices and domestic retail food price inflation : some insights from the UK. In: Journal of Agricultural Economics. 2016 ; Vol. 67, No. 3. pp. 566-583.
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