The impact of commodity price rises on consumers' food price inflation: Differences among income groups

Stavros Zografakis (), Demetrios Damianos () and Yiorgos Alexopoulos ()
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Stavros Zografakis: Department of Agricultural Economics & Rural Development Agricultural University of Athens
Demetrios Damianos: Department of Agricultural Economics & Rural Development Agricultural University of Athens
Yiorgos Alexopoulos: Department of Agricultural Economics & Rural Development Agricultural University of Athens

No 2009-04, Working Papers from Agricultural University of Athens, Department Of Agricultural Economics

Abstract: "The substantial rise of world prices of agricultural products due to a host of mutually supporting factors that influenced both their supply and demand between 2005 and the first half of 2008 led to a subsequent increase in the price of food at the retail level. Although this trend has reversed recently, official views and researchers stress that within the next ten years the real term prices of important agricultural products are expected to increase substantially to the detriment of, mainly the lower income, consumers. This paper examines the impact of commodity price rises on consumers' food price inflation. It searches among the differences in the composition of food expenses and presents indicative results of a quite different food consumption pattern among EU member states' consumers and within countries. It highlights the impacts of the observed food price increases not only upon low income households, which were found to be relatively more affected than their higher income counterparts, but upon member states with a lower level of economic development as well, which seemed to have lost their price convergence pace. Hence, it stresses the importance of adequate and prompt policy design to alleviate the consequences of future negative price developments."

Keywords: Agricultural Products; Prices; Inflation; Food Policy (search for similar items in EconPapers)
JEL-codes: D12 Q11 Q18 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2009
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