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International Food Commodity Prices and Missing (Dis)Inflation in the Euro Area

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  • Gert Peersman

    (Ghent University)

Abstract

Exogenous shifts in international food commodity prices, which are identified using an SVAR model with global harvest shocks as an external instrument, explain almost 30% of euro-area inflation volatility over the medium term and contributed significantly to the twin puzzle of missing (dis)inflation in the era after the Great Recession. International food price shocks have an impact on food retail prices through the food production chain, but also trigger indirect inflationary effects via a depreciation of the euro and, most important, rising wages. Finally, due to asymmetric wage responses, the inflationary effects are very different across member states.

Suggested Citation

  • Gert Peersman, 2022. "International Food Commodity Prices and Missing (Dis)Inflation in the Euro Area," The Review of Economics and Statistics, MIT Press, vol. 104(1), pages 85-100, March.
    • Handle: RePEc:tpr:restat:v:104:y:2022:i:1:p:85-100
    DOI: 10.1162/rest_a_00939
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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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