Do higher global oil and wheat prices matter for the wheat flour price in Lebanon?

Abstract This article investigates the effect of global oil and wheat prices, and local price shocks on the real price of wheat flour in Lebanon. We estimate a structural vector autoregressive model with exogenous variables (SVARX) using Bayesian methods. We then compute the impulse response functions and find that global commodity price shocks play a trivial role. Meanwhile, local gasoline price and wheat flour price‐specific shocks trigger large increases in the Lebanese wheat flour price on impact. Furthermore, since 2020, local gasoline price and wheat flour price‐specific shocks have contributed the most to the historical variation in the Lebanese wheat flour price.