How Will Food Prices Affect Inflation?
- By Sam van de Schootbrugge
- 8 min read
Summary
- An IMF working paper examines how changes in the Baltic Dry Index, a measure of the average price paid to transport dry bulk materials, affects inflation.
- The results show that when freight rates double, as they have done since early February, YoY headline inflation rises 0.7pp over 12 months.
- The analysis helps us estimate the impact of both supply chain issues and rising global food prices.
- Using the IMF’s model, we show that Q1 2022 global food prices rises could add as much as 1.5pp to headline inflation by Q3 2022.
This article is only available to Macro Hive subscribers. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more.