Abstract:

Food prices are one of the important subheadings of the concept of inflation. This study aims to reveal the existence and size of a scientific relationship between agricultural producer prices and exchange rate variables, focusing on food prices. In the study, the Food Price Index series, representing food prices, and the Agricultural Producer Price Index series, representing producer prices of agricultural products, are included in the analysis. The data belonging the period 2010M01-2022M08 are used. The stationarity and Granger Causality of the series are examined, and then the possible relationships between the series are analysed using the ARDL cointegration method. As a result, a long-run relationship was found between the Food Price Index, Agricultural Producer Price Index, and Dollar exchange rate series. In this context, it is concluded that food prices are affected by the product prices offered by the producer to the market and the dollar exchange rate in the long run. Still, the exchange rate effect increases food prices more than agricultural producer prices. Therefore, the most effective way to combat food price increases is to implement a policy which helps Turkish lira gain value against the dollar exchange rate.

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