LIQUID FUEL PRICES AND THEIR IMPACT ON FOOD INFLATION IN BULGARIA
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Abstract
In recent years, food inflation has become one of the major economic challenges, affecting households and economic policy across Europe. Developments in energy markets are among the factors contributing to rising food prices and have attracted increasing attention. Liquid fuels are a vital part of transport, agriculture and distribution, so changes in their prices are a key factor in food costs. Geopolitical tensions in the Middle East and concerns about the security of oil shipments through the Strait of Hormuz, one of the world's most important energy transit routes, have added to this uncertainty. These events have increased volatility in the global oil market and influenced the price of liquid fuels in Bulgaria. This study examines the relationship between the consumer price indices for liquid fuels and food in Bulgaria. Using monthly data, the analysis employs dynamic, correlation, and regression methods to evaluate whether a causal relationship exists between the two indicators. The empirical results reveal a statistically significant linear relationship, providing evidence that changes in liquid fuel prices are followed by corresponding movements in food prices. The strongest relationship is observed at an eight-month lag. These results confirm the significance of fuel price developments in influencing food inflation, suggesting that fuel price indicators could be a valuable tool for anticipating future inflationary pressures in the food sector.
How to Cite
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liquid fuel prices, food prices, causal relationship
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