Skip to main content
SpringerLink
Log in

Global food price volatility and inflationary pressures among developing economies

  • Original Article
  • Published:
SN Business & Economics Aims and scope Submit manuscript

Abstract

The study evaluates the impact of volatility in global commodity (food) prices on domestic inflationary conditions among economies in sub-Saharan Africa. Data for the analyses were compiled from relevant sources for 27 economies from the sub-region from 1996 to 2019. Empirical results from the two-step system generalized method of moments estimation technique suggest that volatility in the global price of traded commodities, such as corn, rice, and beef (staple food items among most economies in the sub-region), tends to worsen inflationary conditions among economies in the sub-region, all other things being equal. Further empirical estimates show that global inflationary conditions exacerbate domestic inflationary conditions, while appreciable global economic growth or performance helps to assuage the extent of inflationary conditions among economies in the sub-region. Additionally, further results suggest that institutional quality helps negate some of the adverse effects of volatility in the global price of rice and global inflationary conditions on domestic inflationary conditions among economies in the sub-region.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Data availability statement

The datasets generated during and/or analyzed during the current study are all publicly available and noted in the data section of the manuscript.

References

  • Abaidoo R, Agyapong E (2021) Macroeconomic risk and political stability: perspectives from emerging and developing economies. Glob Bus Rev. https://doi.org/10.1177/09721509211047650

    Article  Google Scholar 

  • Abaidoo R, Agyapong EK (2022) Commodity prices, inflation, and inflation uncertainty among emerging economies. J Econ Adm Sci. https://doi.org/10.1108/JEAS-10-2021-0203

    Article  Google Scholar 

  • Abaidoo R, Anyigba H (2020) Bank performance variability and strands of inflationary conditions. Eur J Manag Bus Econ 29(3):235–253

    Article  Google Scholar 

  • Abaidoo R, Agyapong EK, Boateng KF (2021) Stability in the banking industry and commodity price volatility: perspective from developing economies. J Econ Adm Sci. https://doi.org/10.1108/JEAS-05-2021-0089

    Article  Google Scholar 

  • Abdi H, Williams LJ (2010) Principal component analysis. Wiley Interdiscip Rev Comput Stat 2(4):433–459

    Article  Google Scholar 

  • Adam C (1995) Fiscal adjustment, financial liberalization, and the dynamics of inflation: some evidence from Zambia. World Dev 23(5):735–750

    Article  Google Scholar 

  • Adu G, Marbuah G (2011) Determinants of inflation in Ghana: an empirical investigation. S Afr J Econ 79(3):251–269

    Article  Google Scholar 

  • Agoba AM, Abor J, Osei KA, Sa-Aadu J (2017) Central bank independence and inflation in Africa: the role of financial systems and institutional quality. Central Bank Rev 17(4):131–146

    Article  Google Scholar 

  • Agyei SK, Isshaq Z, Frimpong S, Adam AM, Bossman A, Asiamah O (2021) COVID-19 and food prices in sub-Saharan Africa. Afr Dev Rev 33:S102–S113

    Article  Google Scholar 

  • Ahamed MM, Mallick SK (2019) Is financial inclusion good for bank stability? International evidence. J Econ Behav Organ 157:403–427

    Article  Google Scholar 

  • Ahmed S, Hasan MM, Kamal MR (2022) Russia-Ukraine crisis: the effects on the European stock market. Eur Financ Manag. https://doi.org/10.1111/eufm.12386

    Article  Google Scholar 

  • Aït-Sahalia Y, Cacho-Diaz J, Laeven RJ (2015) Modeling financial contagion using mutually exciting jump processes. J Financ Econ 117(3):585–606

    Article  Google Scholar 

  • Alexander AA, Andow AH, Danpome MG (2015) Analysis of the main determinants of inflation in Nigeria. Res J Finance Account 6(2):144–155

    Google Scholar 

  • Allen F, Gale D (2000) Financial contagion. J Polit Econ 108(1):1–33

    Article  Google Scholar 

  • Asamoah ME, Adjasi CK, Alhassan AL (2016) Macroeconomic uncertainty, foreign direct investment and institutional quality: evidence from Sub-Saharan Africa. Econ Syst 40(4):612–621

    Article  Google Scholar 

  • Amewu S, Asante S, Pauw K, Thurlow J (2020) The economic costs of COVID-19 in sub-Saharan Africa: insights from a simulation exercise for Ghana. Eur J Dev Res 32(5):1353–1378

    Article  Google Scholar 

  • Basel S, Gopakumar KU, Rao RP (2020) Broad-based index for measurement of development. J Soc Econ Dev 22(1):182–206

    Article  Google Scholar 

  • Cecchetti SG, Moessner R (2008) Commodity prices and inflation dynamics. BIS Q Rev 55–66

  • Choi S, Furceri D, Loungani P, Mishra S, Poplawski-Ribeiro M (2018) Oil prices and inflation dynamics: evidence from advanced and developing economies. J Int Money Financ 82:71–96

    Article  Google Scholar 

  • Chortane SG, Pandey DK (2022) Does the Russia-Ukraine war lead to currency asymmetries? A US dollar tale. J Econ Asymmetries 26:e00265

    Article  Google Scholar 

  • Danquah M, Schotte S, Sen K (2020) Covid-19 and employment: insights from the sub-Saharan African experience. Indian J Labour Econ 63(1):23–30

    Article  Google Scholar 

  • Davidson J, Halunga A, Lloyd T, McCorriston S, Morgan W (2016) World commodity prices and domestic retail food price inflation: some insights from the UK. J Agric Econ 67(3):566–583

    Article  Google Scholar 

  • Duho KCT, Abankwah SA, Agbozo DA, Yonmearu G, Aryee BNA, Akomanin O (2022) Exploring the Russo-Ukrainian crisis and its impact on African countries: a cross-regional analysis. Dataking Policy Brief 005, Accra, Dataking Consulting 2022

  • Elith JH, Graham CP, Anderson R, Dudík M, Ferrier S, Guisan A, Li J (2006) Novel methods improve prediction of species’ distributions from occurrence data. Ecography 29(2):129–151

    Article  Google Scholar 

  • Fasanya IO, Awodimila CP (2020) Are commodity prices good predictors of inflation? The African perspective. Resour Policy 69:101802

    Article  Google Scholar 

  • Fiordelisi F, Molyneux P (2010) The determinants of shareholder value in European banking. J Bank Finance 34(6):1189–1200

    Article  Google Scholar 

  • Gelos G, Ustyugova Y (2017) Inflation responses to commodity price shocks–How and why do countries differ? J Int Money Financ 72:28–47

    Article  Google Scholar 

  • Gökbulut RI, Pekkaya M (2014) Estimating and forecasting volatility of financial markets using asymmetric GARCH models: an application on Turkish financial markets. Int J Econ Financ 6(4):23–35

    Google Scholar 

  • Gospodinov N, Ng S (2013) Commodity prices, convenience yields, and inflation. Rev Econ Stat 95(1):206–219

    Article  Google Scholar 

  • Hansen PR, Lunde A (2003) Does anything beat a GARCH (1, 1)? A comparison based on test for superior predictive ability. In: Proceedings 2003 IEEE international conference on computational intelligence for financial engineering, 2003. IEEE, pp 301–307

  • Hwang J, Sun Y (2018) Should we go one step further? An accurate comparison of one-step and two-step procedures in a generalized method of moments framework. J Econ 207(2):381–405

    Article  Google Scholar 

  • Iya IB, Aminu U (2014) An empirical analysis of the determinants of inflation in Nigeria. J Econ Sustain Dev 5(1):140–150

    Google Scholar 

  • Jagtap S, Trollman H, Trollman F, Garcia-Garcia G, Parra-López C, Duong L, Afy-Shararah M (2022) The Russia-Ukraine conflict: its implications for the global food supply chains. Foods 11(14):2098

    Article  Google Scholar 

  • Jakšić S (2022) Modelling determinants of inflation in CESEE countries: global vector autoregressive approach. Rev Econ Perspect 22(1):137–169

    Article  Google Scholar 

  • Joshi AR, Acharya D (2011) Commodity prices and domestic inflation in India. Glob J Emerg Mark Econ 3(2):223–246

    Google Scholar 

  • Kamau NL (2010) The impact of regional integration on economic growth: empirical evidence from COMESA, EAC and SADC trade blocs. Am J Soc Manag Sci 1(2):150–163

    Google Scholar 

  • Kammer A, Azour J, Selassie AA, Goldfajn I, Rhee C (2022) How war in Ukraine is reverberating across world’s regions. IMF, Washington

  • Kannan P, Kohler-Geib F (2009) The uncertainty channel of contagion. Policy Research Working Paper. Series 4995, The Word Bank. https://doi.org/10.1596/1813-9450-4995

  • Khan REA, Gill AR (2010) Determinants of inflation: a case of Pakistan (1970–2007). J Econ 1(1):45–51

    Article  Google Scholar 

  • Kurihara Y (2013) International trade openness and inflation in Asia. Res World Econ 4(1):70–75

    Google Scholar 

  • Lapinskaite I, Miecinskiene A (2019) Assessment of the impact of hard commodity prices changes on inflation in European Union countries. Central Eur Bus Rev 8(5)

  • Liadze I, Macchiarelli C, Mortimer-Lee P, Juanino PS (2022) The economic costs of the Russia-Ukraine conflict. NIESR Policy Paper, p 32

  • Liao D, Valliant R (2012) Variance inflation factors in the analysis of complex survey data. Surv Methodol 38(1):53–62

    Google Scholar 

  • Lim YC, Sek SK (2015) An examination on the determinants of inflation. J Econ Bus Manag 3(7):678–682

    Google Scholar 

  • Madito O, Odhiambo NM (2018) The main determinants of inflation in South Africa: an empirical investigation. Organ Mark Emerg Econ 9(2):212–232

    Google Scholar 

  • Martínez-Jaramillo S, Pérez OP, Embriz FA, Dey FLG (2010) Systemic risk, financial contagion and financial fragility. J Econ Dyn Control 34(11):2358–2374

    Article  Google Scholar 

  • Miecinskiene A, Lapinskaite I (2014) The research on the impact of the changes of commodity price level in the world commodity exchanges on variation of general price level. Econ Sociol 7(4):71

    Article  Google Scholar 

  • Misati RN, Nyamongo EM, Mwangi I (2013) Commodity price shocks and inflation in a net oil-importing economy. OPEC Energy Rev 37(2):125–148

    Article  Google Scholar 

  • Mwansa R (2022) Analysis of the Russia-Ukraine War’s Consequences on Sustainable Livelihoods of Refugees in Africa. Am J Interdiscip Res Innov 1(1):14–24

    Article  Google Scholar 

  • Naveh MH, Torosyan T, Jalaee SA (2012) Regional economic integration and its effects on economic growth and economic welfare. World Appl Sci J 17(10):1349–1355

    Google Scholar 

  • Nguyen HM, Cavoli T, Wilson JK (2012) The determinants of inflation in Vietnam, 2001–09. ASEAN Econ Bull 1–14

  • Ofoeda I, Agbloyor EK, Abor JY (2022) How do anti-money laundering systems affect FDI flows across the globe? Cogent Econ Finance 10(1):2058735

    Article  Google Scholar 

  • Okorie IE, Ohakwe J (2018) Forecasting Nigeria’s inflation and the world prices of her major agricultural export commodities with probability distributions via VaR and ES and estimating their dependence via copula. Commun Stat Case Stud Data Anal Appl 4(1):28–45

    Google Scholar 

  • Orhan E (2022) The effects of the Russia-Ukraine war on global trade. J Int Trade Logist Law 8(1):141–146

    Google Scholar 

  • Reschenhofer E (2013) Does anyone need a GARCH (1, 1). J Field Actions 1(2):48–53

    Google Scholar 

  • Roodman D (2009) How to do xtabond2: an introduction to difference and system GMM in Stata. Stata J 9(1):86–136

    Article  Google Scholar 

  • Sarpong-Kumankoma E, Abor J, Aboagye AQQ, Amidu M (2018) Freedom, competition, and bank profitability in Sub-Saharan Africa. J Financ Regul Compliance 26(4):462–481

    Article  Google Scholar 

  • Sayek S (2009) Foreign direct investment and inflation. South Econ J 76(2):419–443

    Article  Google Scholar 

  • Sendhil R, Jha A, Kumar A, Singh S (2018) Extent of vulnerability in wheat producing agro-ecologies of India: tracking from indicators of cross-section and multi-dimension data. Ecol Ind 89:771–780

    Article  Google Scholar 

  • Teachout M, Zipfel C (2020) The economic impact of COVID-19 lockdowns in sub-Saharan Africa. Int Growth Centre 1:1–16

    Google Scholar 

  • Tule MK, Salisu AA, Chiemeke CC (2019) Can agricultural commodity prices predict Nigeria’s inflation? J Commod Mark 16:100087

    Article  Google Scholar 

  • Umar Z, Polat O, Choi SY, Teplova T (2022) The impact of the Russia-Ukraine conflict on the connectedness of financial markets. Finance Res Lett 48:102976

    Article  Google Scholar 

  • Wooldridge JM (2001) Applications of generalized method of moments estimation. J Econ Perspect 15(4):87–100

    Article  Google Scholar 

Download references

Acknowledgements

The manuscript was developed solely by the authors and we have no other person/s to acknowledge in the development of the manuscript.

Funding

No external funding was sourced or used in the development of this manuscript that needs to be reported.

Author information

Authors and Affiliations

  1. University of Maryland Eastern Shore, EASC Building Room 2094, Princess Anne, MD, 21853, USA

    Rexford Abaidoo

  2. Ghana Institute of Management and Public Administration, GIMPA Green Hill, Achimota, Accra, Ghana

    Elvis Kwame Agyapong

Authors
  1. Rexford Abaidoo
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Elvis Kwame Agyapong
    View author publications

    You can also search for this author in PubMed Google Scholar

Contributions

The concept for the manuscript was developed, and designed by RA. RA also wrote the introduction of the manuscript and developed the various components of the manuscript. He is also involved in the results interpretations and fine-tuning of the final manuscript. EKA is responsible for the literature review, and empirical estimations, and wrote the sub-sections following the literature review section as well.

Corresponding author

Correspondence to Rexford Abaidoo.

Ethics declarations

Conflict of interest

We, the authors of the above manuscript, declare that the current manuscript has not been sent to any other journal for review and publication. We also wish to declare that there is no conflict of interest in any shape or form in the development of this manuscript. We further wish to declare that no funding was sourced in the development of this manuscript and that both developers of this manuscript consent to its presentation for review and possible publication. This manuscript is an original work from the two authors (Prof. Rexford Abaidoo and Mr. Elvis Kwame Agyapong as acknowledged in the manuscript).

Ethical approval

This study does not require any form of ethical approval because no human or animal subjects were used or engaged in any form in the development of the manuscript.

Informed consent

This article does not contain any studies with human participants performed by any of the authors.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Abaidoo, R., Agyapong, E.K. Global food price volatility and inflationary pressures among developing economies. SN Bus Econ 3, 188 (2023). https://doi.org/10.1007/s43546-023-00569-3

Download citation

  • Received:

  • Accepted:

  • Published:

  • DOI: https://doi.org/10.1007/s43546-023-00569-3

Keywords

JEL Classification

Search

Navigation