Analysis reveals climate variability and external factors shape food inflation in the US, indicating complex interactions.
Key Points
This research aims to understand how climate variability, agricultural productivity, and external factors influence food and beverage inflation in the U.S.
Analyzed data from 1992.01 to 2024.05
Utilized the Actuaries Climate Index components to capture climate conditions
Incorporated agricultural total factor productivity and Global Supply Chain Pressure Index
Applied a quantile factor model to assess common dynamics from commodity prices
Integrated these factors into a FAVAR framework for analysis
External drivers significantly influence food and beverage inflation, especially in high percentiles of international food prices
Climate factors showed nuanced effects, with high-temperature frequency having a slight disinflationary effect
Agricultural total factor productivity only modestly reduces food and beverage inflation