Evaluating Transmission Prices between Global Agricultural Markets and Consumers' Food Price Indices in the EU

The rise of price levels and volatility of world agricultural commodities since 2006-2008 was followed by increased and more volatile food price inflation around the world. Using error correction models, this paper evaluates the velocity and extent to which world agricultural commodity price movements affect consumer food prices in the 28 EU's Member States. Results show a significant long run relationship between world agricultural commodity prices and food consumer prices in over half of the Member States. They present varying long run price transmission elasticities and a slow adjustment of prices. In general first members of the Eurozone have lower transmission elasticities than the others.