Research Briefing | May 23, 2022

Surging global food prices could drive eurozone core inflation higher

Along with energy prices, global food prices have emerged as a key driver of the eurozone’s current inflationary surge. Like other advanced economies, eurozone countries tend to be less exposed to global food price fluctuations. But if persistent and combined with strong demand, high food prices could result in a higher pass-through to core inflation.

What you will learn:

  • Moreover, the impact of rising food prices is uneven across the eurozone.
  • We find that Baltic countries in particular but also Spain and Belgium see relatively large increases in inflation one to two years following global food price shocks.
  • Aside from pushing up retail food prices, high global food prices will eventually feed into core inflation, mainly via higher restaurant prices.

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