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Understanding the food component of inflation

TL;DR: In this article , the authors present evidence based on a panel of 35 countries over the past 30 years that the Phillips curve relation holds for food inflation, and quantifies the extent to which higher food production and imports, or lower food exports, reduce food inflation.
Abstract: This article presents evidence based on a panel of 35 countries over the past 30 years that the Phillips curve relation holds for food inflation. That is, broader economic overheating does push up the food component of the CPI in a systematic way. Further, general inflation expectations from professional forecasters clearly impact food price inflation. The analysis also quantifies the extent to which higher food production and imports, or lower food exports, reduce food inflation. Importantly, the link between domestic and global food prices is typically weak, with passthroughs within a year ranging from 0.07 to 0.16, after exchange rate variations are taken into account.
Trending Questions (3)
What factors contribute to the inflation rate of chicken and pork in the food industry?

Factors contributing to chicken and pork inflation include economic overheating, inflation expectations, food production, imports, exports, and weak domestic-global price linkages with passthroughs of 0.07 to 0.16 within a year.

Does increase in GDP cause increase in food inflation?

Yes, economic overheating, indicated by higher GDP, systematically raises the food component of CPI. General inflation expectations also impact food price inflation, as shown in the study.

Why is food inflation an important topic to study?

Food inflation is an important topic to study because it is influenced by broader economic conditions and inflation expectations, and understanding its dynamics can help policymakers in managing inflation and ensuring food price stability.