Effect of Global Energy Price Shocks on Dynamics of World Agricultural and Food Prices

Prices and quantities in agricultural commodity and food product markets are subject to constant changes due to evolving supply and demand conditions. Big and sudden shifts in supply or demand may lead to price movements that bring negative consequences for food producers or consumers. Factors causing such movements can be of different natures, but substantial changes in the world energy price levels are supposed to be one of the most important. The purpose of the study was to investigate the effect of global energy price shocks on the evolution of food commodities and food consumer prices. Using the World Bank data on the respective price indices, we looked for shocks in these data series by utilizing statistical tools. Having identified three global energy price shocks in the period 2000–2024 induced by the financial crisis of 2008, the COVID-19 pandemic, and the outbreak of war in Ukraine, their influence on the world agricultural commodity prices and food consumer prices was assessed. It was found that the series of energy, food commodity, and food consumer price indices were related in the long term. Also, the occurrence of global energy price shocks to a visible extent translated into global food commodity and food consumer price shocks. Applying various statistical and econometric techniques, including Chow tests and MS-VAR modelling, enables the identification of which breaking points led to regime changes between the analysed variables. The most sensitive to the structural breaking points appeared to be the relation between energy and consumer food prices. This discovery can be considered our major contribution.