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Consumer Price-Setting Behaviour:Evidence from Food CPI Microdata

Author

Listed:
  • Fernando Martins
  • João Quelhas

Abstract

This paper studies the price-setting behaviour in food products, using the microdata underlying the Portuguese Consumer Price Index (CPI). We document that, on average, more than onequarter of food prices changed every month and half displayed price spells shorter than 5.3 months. Positive price changes were more frequent and had a higher magnitude than price decreases. There is a strong heterogeneity across type of industry and outlet. We find that, from 2009 to 2019, food inflation was primarily driven by the frequency of price changes rather than the magnitude, and price changes were more frequent at the producer than at the consumer level, but in a lower magnitude. Finally, we report that frequency and magnitude estimates are higher when using daily online price data, meaning that intra-month patterns in price dynamics, not captured by the official inflation statistics, are relevant.

Suggested Citation

  • Fernando Martins & João Quelhas, 2024. "Consumer Price-Setting Behaviour:Evidence from Food CPI Microdata," Working Papers REM 2024/0345, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    • Handle: RePEc:ise:remwps:wp03452024
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    File URL: https://rem.rc.iseg.ulisboa.pt/wps/pdf/REM_WP_0345_2024.pdf
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    More about this item

    Keywords

    price stickiness; price-setting behaviour; consumer prices; microdata; inflation.;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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