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 journalArticlepeer-review

11 Citations (SciVal)


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.

Original languageEnglish
Pages (from-to)566-583
JournalJournal of Agricultural Economics
Issue number3
Early online date24 May 2016
Publication statusPublished - Sept 2016


  • Food prices
  • Inflation
  • Price transmission
  • VAR models


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