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We establish five facts about prices in the U.S. economy: (1) For consumer prices, the median frequency of nonsale price change is roughly half of what it is including sales (9-12% per month versus 19-20% per month for identical items; 11-13% per month versus 21-22% per month including product substitutions). The median frequency of price change for finished-goods producer prices is comparable to that of consumer prices excluding sales. (2) One-third of nonsale price changes are price decreases. (3) The frequency of price increases covaries strongly with inflation, whereas the frequency of price decreases and the size of price increases and price decreases do not. (4) The frequency of price change is highly seasonal: it is highest in the first quarter and then declines. (5) We find no evidence of upwardsloping hazard functions of price changes for individual products. We show that the first, second, and third facts are consistent with a benchmark menu-cost model, whereas the fourth and fifth facts are not.

The Syrian Conflict generated forced immigration from northern Syria to southeastern Turkey. Arrival of refugees resembles a natural experiment, which offers good opportunities to study the economic impact of immigration. I study three main outcomes: labor markets, consumer prices, and housing rents. I document moderate employment losses among native informal workers, which suggests that they are partly substituted by refugees. Prices of the items produced in informal labor intensive sectors declined due to labor cost advantages generated by refugee inflows. Finally, refugee inflows increased the rents of higher quality housing units, while there is no effect on lower quality units.

This article studies how voting for Brexit affected living standards in the United Kingdom. Using heterogeneity in exposure to import costs across product groups, we analyze how the depreciation of sterling caused by the referendum affected consumer prices. We find that the Brexit depreciation led to higher inflation in product groups with greater import shares in consumer expenditure. Our results are consistent with complete pass-through of import costs to consumer prices and imply aggregate exchange rate pass-through of 0.29. We estimate the Brexit depreciation increased consumer prices by 2.9%, costing the average household £870 per year.

We analyse the historical relationship between consumer prices and wages in Switzerland. Our results show that, between 1980 and 2019, the pass-through from prices to wages was substantial. At the same time, nominal wage increases only had a modest effect on prices. Other factors—such as imported inflation, inflation expectations and economic slack—clearly dominate wages in explaining price movements in Switzerland. Second-round effects of inflation, in turn, are mainly explained by inflation expectations. Our results suggest that the pass-through from wages to prices could be higher in an environment of elevated inflation. However, even in the 1980s and 1990s, the pass-through was only modest. It follows that periods of simultaneously high inflation and high wage growth were not the result of a wage-price spiral. Instead, the long-term comovement of the two variables can mostly be explained by common drivers (e.g. inflation expectations, economic slack) and by the gradual adjustment of wages to prices.

Recently, the inflationary impacts of climate change shocks have emerged among key constraints to price and financial stability. In line with this development, some Central banks are incorporating climate change risks in their surveillance activities. Thus, this study examines the asymmetric inflationary impact of climate change shocks on food and general consumer prices in Algeria, Egypt, Nigeria, and South Africa. The study employs a panel quantile via the moment’s method and a wavelet coherency analysis for monthly from 2000M01 to 2023M12. The empirical results reveal that, first, there is a dynamic interconnectedness between climate change shocks and inflation. Secondly, the results show that climate change shocks have an inflationary impact on food and general consumer prices. However, the magnitude and direction of the impact depend on the prevailing inflationary regime. Finally, the analysis shows that climate change shocks raise inflation uncertainty. Collectively, these findings imply that climate change shocks are key sources of inflationary pressures and uncertainty, posing significant challenges to central banks’ inflation management. One implication of these findings is that central banks in these countries will likely face extreme difficulty stabilising inflation since monetary policy instruments are mainly demand management, and thus may be ineffective in dealing with climate change shocks. In line with the findings, the study recommends that these countries should enhance their inflation surveillance and monetary policy strategies but considering the potential climate change risks.

This study examines whether portfolio optimization can be effectively based on annual changes in the harmonized index of consumer prices (HICP) data. Specifically, we assess whether asset allocation based on consumer expenditure can generate superior returns compared to static or equal-weighted asset allocation. To explore this, we use consumer expenditure data from HICP statistics categorized by COICOP. Our findings indicate that this strategy outperforms a buy-and-hold benchmark by 13.32% in terms of the Sharpe Ratio and exceeds an annual equal-weighted rebalancing strategy by 3.11%. Additionally, both the Calmar and Sterling Ratios demonstrate improved performance, further reinforcing the robustness of this approach. Furthermore, a hypothetical scenario where sector weights from the end of the given year—though not yet available during the year—are used suggests even greater improvements in performance. A high-sample bootstrap simulation confirms that the observed performance differences are not random but reflect the independent effectiveness of asset allocation based on consumer expenditure trends. This result strengthens the validity of our backtesting findings, indicating that the examined strategy could generate excess returns compared to passive portfolio managment and fixed-weight rebalancing approaches. The result of the study is therefore the development of an effective portfolio rebalancing strategy.

The present study aims to analyze the trends in food price in Brazil with emphasis on the period of the Covid-19 pandemic (from March 2020 to March 2022). Data from the Brazilian Household Budget Survey and the National System of Consumer Price Indexes were used as input to create a novel data set containing monthly prices (R$/Kg) for the foods and beverages most consumed in the country between January 2018 and March 2022. All food items were divided according to the Nova food classification system. We estimated the mean price of each food group for each year of study and the entire period. The monthly price of each group was plotted to analyze changes from January 2018 to March 2022. Fractional polynomial models were used to synthesize price changes up to 2025. Results of the present study showed that in Brazil unprocessed or minimally processed foods and processed culinary ingredients were more affordable than processed and ultra-processed foods. However, trend analyses suggested the reversal of the pricing pattern. The anticipated changes in the prices of minimally processed food relative to ultra-processed food, initially forecasted for Brazil, seem to reflect the impact of the Covid-19 pandemic on the global economy. These results are concerning as the increase in the price of healthy foods aggravates food and nutrition insecurity in Brazil. Additionally, this trend encourages the replacement of traditional meals for the consumption of unhealthy foods, increasing a health risk to the population.

This paper exploits a unique dataset (monthly observations on consumer prices and VAT rates for around 70 commodity groups in 17 Eurozone countries over 1999–2013) to identify the extent of pass through for several types of VAT change—including (a key concern, previously unaddressed) in the standard VAT rate. The impact on consumer prices proves to vary systematically and sharply across these different types of VAT reform. For example, the usual presumption of full pass through is broadly confirmed for changes in the standard rate, but pass through for reduced rates appears to be generally noticeably lower. The results are robust against endogeneity and attenuation bias.

Scanner data can be obtained from a wide variety of retailers (supermarkets, home electronics, Internet shops, etc.) and provide information at the level of the barcode, i.e. the Global Trade Item Number or its European version: European Article Number. One of advantages of using scanner data in the Consumer Price Index measurement is the fact that they contain complete transaction information, i.e. prices and quantities for every sold item. One of new challenges connected with scanner data is the choice of the index formula which should be able to reduce the chain drift bias and the substitution bias. Multilateral index methods seem to be the best choice in the case of dynamic scanner data sets. These indices work on a whole time window and are transitive, which is a key property in eliminating the chain drift effect. Following the so-called identity test, however, one may expect that even when only prices return to their original values, the index becomes one. Unfortunately, the commonly used multilateral indices (GEKS, CCDI, GK, TPD, TDH) do not meet the identity test. The paper discusses the proposal of two multilateral indices, the idea of which resembles the GEKS index, but which meet the identity test and most of other tests. In an empirical study, these indices are compared, inter alia, with the SPQ index, which is relatively new and also meets the identity test. Analytical considerations as well as empirical study confirm the high usefulness of the proposed indices.

This paper examines optimal monetary policy in an open-economy two-country world with sticky prices under pricing to market. We show that currency misalignments are inefficient and lower world welfare. We find that optimal policy must target consumer price inflation, the output gap, and the currency misalignment. The paper derives the loss function of a cooperative monetary policymaker and the optimal targeting rules. The model is a modified version of Clarida, Galí, and Gertler (JME, 2002). The key change is that we allow pricing to market or local-currency pricing and consider the policy implications of currency misalignments. JEL: E52, F31, F41