Abstract:

This study examines the effect of exchange rate on food prices in the Türkiye economy by proportioning food prices to the general price index. In the light of the findings, it is desired to evaluate the relationship between exchange rate increases and food prices and the problems that this relationship may cause. In recent years, exchange rates in the Türkiye economy have increased more dramatically compared to countries with similar development levels. The pass-through of these increases to the inflation rate can be seen more in food prices than in other products. This situation can further reduce the purchasing power of consumers who have a high share of food products in their total expenditures. In this context, the fact that the exchange rate affects the prices of goods and services groups at different levels can affect many economic and social variables, especially the economic income distribution. In order to test the hypothesis of the study, time series analysis was performed using Newey-West estimators with monthly frequency data covering the period of January 1990 and March 2023 for the Türkiye economy. The ratio of the food price index to the general price index was used in the analysis, and thus a relatively healthy comparison of food prices to general price increases was made. The explanatory variable was determined as the exchange rate. According to the results, lagged values of food prices reduce the current value of food prices. Therefore, it can be said that producers in the food sector are sensitive to prices and increase their supply as a result of price increases, bringing the market to the equilibrium price level. As expected, the exchange rate moves linearly with the dependent variable. Increase in exchange rates increase food prices more than the prices of other product groups.

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