Recipient Organization
UNIVERSITY OF GEORGIA
200 D.W. BROOKS DR
ATHENS,GA 30602-5016
Performing Department
(N/A)
Non Technical Summary
Food prices in the United States have risen sharply in recent years, causing concern among consumers, policymakers, and industry professionals. Understanding why these price increases are happening is crucial for developing effective strategies to stabilize food costs and ensure food security. This project will identify the main factors driving food price inflation, such as disruptions in supply chains and changes in consumer demand, and provide targeted policy recommendations to address these issues.To achieve this, we will collect detailed data on food prices from thousands of stores across the country and use advanced statistical methods to analyze the causes of price changes. We will create newregional price indices (analogues to the national indices that currently exist)and use innovative models to determine whether supply issues, like transportation problems, or demand factors, like increased consumer spending, are the main drivers of inflation in different areas. By mapping these trends and analyzing them over time, we can pinpoint the specific regions and products most affected.The ultimate goal of this project is to provide actionable insights that policymakers can use to mitigate food price inflation. By understanding the forces behind price increases, we can develop targeted interventions, such as improving supply chain efficiency or adjusting fiscal/monetary policies, to help stabilize food prices. This will benefit consumers by making food more affordable and accessible, ultimately contributing to greater food security and economic stability for communities across the United States.
Animal Health Component
60%
Research Effort Categories
Basic
20%
Applied
60%
Developmental
20%
Goals / Objectives
The overarching goal of this project is to understand the evolution oflocal food price inflation in the United States, understand relative contributions of both the supply and demand sides,and identify areas for possible, targeted policy intervention.Objectives Supporting the Major GoalConstruct Novel, Market-Level Food Price IndicesDevelop comprehensive price indices for food products at the county and/or Metropolitan Statistical Area (MSA) levels using high-frequency scanner data.Determine Contributions of Supply and Demand FactorsApply a recently-developed economic model to decompose local food price inflation into supply and demand factors. This will involve the use of advanced econometric techniques to identify the specific drivers of inflation in various markets.Identify Susceptible Regions and Product MarketsUsemapping techniques and panel analysis to pinpoint geographic regions, nodal areas, and specific product markets that are most vulnerable to different types of inflationary pressures. This analysis will aidin understanding the spatial dynamics of food price changes.Synthesize Findings for Policy InsightsIntegrate the insights gained from the price indices and inflation decomposition to provide actionable recommendations for policymakers. This will involve identifying key areas where policy interventions can effectively reduce inflation and enhance food security.Disseminate Research FindingsShare the project's results with relevant stakeholders, including academic researchers, government officials, and industry professionals, bypublishing journal articles, presenting our work at conferences, and producing reports that detail the research findings and their implications for domestic food policy.By achieving these objectives, the project aims to contribute significantly to the understanding of food price inflation in the United States and support the development of targeted, relevant policy measures.
Project Methods
Project Conduct and Scientific Methods: EffortsThe project uses advanced econometric techniques and high-frequency data analysis to investigate the factors contributing to food price inflation in the United States. We anticipate employing the following methods:Data Collection and PreparationScanner Data: Obtain and process high-frequency retail scanner data from Information Resources Inc. (IRI), covering approximately 40,000 stores and accounting for over 50% of total food sales in the United StatesData Cleaning and Index Construction: Use index number methods, particularly the GEKS (Geary-Khamis) method, and the Rolling Window GEKS approach to construct robust price indices at the county and MSA levels, providing accurate regional food price trends.Decomposition of Food Price InflationEconomic Modeling: Apply Shapiro's (2024) recently-developed approachto decompose food price inflation into supply and demand factors. This involves using vector autoregression (VAR) models to estimate the expected price and quantity, and residual analysis to identify the nature of price shocks.Structural Shocks Identification: Classify observed price and quantity changes into supply and demand shocks using econometric techniques, focusing on the sign and size of residuals to identify the forces behind food price changes.Spatial and Temporal AnalysisMapping Techniques: Usegeographic information systems (GIS) to map inflation trends and identify regional disparities; this will involve creating time series visualizations and potentially animations to depict spatial dynamics.Panel Analysis: Conduct panel data analysis to correlate regionalinflation trends with potential explanatory factors such as transportation costs, labor market conditions, and consumer preferences; isolating the most significant drivers of regional food price variations.Evaluation PlanTo evaluate the success and impact of the project, we will apply a systematic evaluation plan, focusing on key milestones and measurable indicators of success.Milestones and IndicatorsData Collection and Index Construction: Completion of comprehensive food price indices for, e.g., counties and MSAs within the first year of the project. Indicators: Number of indices constructed, accuracy, and comprehensiveness of data.Inflation Decomposition: Identification of supply and demand factors contributing to regional food price inflation. Indicators: Number of regions and product groupsanalyzed, precision of decomposition results.Policy Insights and Recommendations: Development of actionable policy recommendations based on project findings. Indicators: presentations and working papers / journal articles, and an ERS report.Impact on Target AudiencesAcademic Community,Policymakers and Industry Professionals: Publication of at least three peer-reviewed journal articles and presentation of findings at major conferences. Indicators: Number of publications, citations, media contacts, and conference presentations.Monitor policy effectsLong-run evaluation will include monitoring the connection between our work andtargeted inflation policy adoption.