Food Inflation in Sub-Saharan Africa: Causes and Policy Implications

By Emre Alper, Niko A Hobdari, Ali Uppal

December 22, 2016

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Emre Alper, Niko A Hobdari, and Ali Uppal. Food Inflation in Sub-Saharan Africa: Causes and Policy Implications, (USA: International Monetary Fund, 2016) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper analyzes food inflation trends in Sub-Saharan Africa (SSA) from 2000 to 2016 using two novel datasets of disaggregated CPI baskets. Average food inflation is higher, more volatile, and similarly persistent as non-food non-fuel (NF/NF) inflation, especially in low-income countries (LICs) in SSA. We find evidence that food inflation became less persistent from 2009 onwards, related to recent improvements in monetary policy frameworks. We also find that high food prices are driven mainly by non-tradable food in SSA and there is incomplete pass-through from world food and fuel prices and exchange rates to domestic food prices. Taken together, these finding suggest that central banks in low-income countries with high and persistent food inflation should continue to pay attention to headline inflation to anchor inflation expectations. Other policy levers include reducing tariffs and improving storage and transport infrastructure to reduce food pressures.

Subject: Commodity price shocks, Exchange rates, Food prices, Foreign exchange, Inflation, Inflation persistence, Prices

Keywords: Africa, Commodity price shocks, Consumer price inflation dispersion, Exchange rates, Food inflation, Food prices, Fuel inflation, Global, Inflation, Inflation expectation, Inflation persistence, Low income countries, NF inflation, Non-food non-fuel inflation, Pass through, Sub-Saharan Africa, West Africa, WP

Publication Details

Pages:

40
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/247
Stock No:

WPIEA2016247
ISBN:

9781475563115
ISSN:

1018-5941

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