Understanding the Food Component of Inflation

No 1056, BIS Working Papers from Bank for International Settlements

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 pass throughs within a year ranging from 0.07 to 0.16, after exchange rate variations are taken into account.

Keywords: crop; expectations; energy; food export; food prices; food import; food production; forecast; inflation; output gap; Phillips curve (search for similar items in EconPapers)
JEL-codes: E30 E31 E32 E50 F14 Q00 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2022-12
New Economics Papers: this item is included in nep-agr, nep-int and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Understanding the food component of inflation (2022)
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