Price transmission between world food prices and different consumer food price indices in Thailand

Abstract

     This paper studied the extent and degree to which world food price indices (wp) are transmitted to consumer price indices (cp) that describe the food expenditure incurred by the average consumer (NCF), the low-income consumer (LCF), and consumers located in rural areas (RCF) of Thailand. The findings showed that all wp were co-integrated with domestic ones, and that the speed of adjustment was similar in all models regardless of the cp used. Furthermore, both the long-run and short-run price transmission elasticity of a change in cp in response to wp were similar when NCF and LCF were included in the error correction models, but were considerably higher when RCF was taken into consideration. Such findings indicate that, within the context of Thailand, study of the impacts of world food prices on the welfare of low-income consumers can be assessed using consumer price indices that are based on food baskets of the general consumer. However, general con­ sumer food price indices do not reflect the effects that changes in world food prices have on the prices of food commodities in rural areas of Thailand.