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Assessment of the Impact of Hard Commodity Prices Changes on Inflation in European Union Countries

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  • Indrė Lapinskaitė
  • Algita Miečinskienė

Abstract

This article analyses the impact of the changes in hard commodity prices in the world commodity exchanges on the variation of countries' general price level. In other words, this article aims to determine the impact of hard commodity prices changes on inflation. In this paper, all countries of the European Union (EU) are included in the research, and case analysis is done accordingly. The methodology applied is the following: a study of the recent scientific literature, processing and systemization of statistical data, correlation analysis and Granger causality test. The results of the research show that price changes of selected commodities in world commodity exchanges have no absolute dependence on the variation of the general price level in EU countries in the long period. Natural gas should be distinguished, whose price fluctuations in the commodity exchange market show a positive correlation with 14 EU countries' CPI changes. In addition, the research shows that Lithuania's inflation has been affected by all five selected commodities' prices fluctuations. UK and Romanian inflation relate to four of five selected commodities' prices fluctuations.

Suggested Citation

  • Indrė Lapinskaitė & Algita Miečinskienė, 2019. "Assessment of the Impact of Hard Commodity Prices Changes on Inflation in European Union Countries," Central European Business Review, Prague University of Economics and Business, vol. 2019(5), pages 18-35.
    • Handle: RePEc:prg:jnlcbr:v:2019:y:2019:i:5:id:230:p:18-35
    DOI: 10.18267/j.cebr.230
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    More about this item

    Keywords

    general price level; inflation; commodity prices; commodity exchange market; European Union;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
    • N54 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Europe: 1913-
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market

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