Analysis of the relationship between agricultural products producer price index and the exchange rate of the food priceindex: ARDL model

Food prices are one of the leading economic phenomena when it comes to inflation, as they affect the consumer quickly and directly. When the literature is examined common reasons affecting the increases in food prices in the world and in Turkey; It is seen that there are components such as changes in agricultural production factors, climatic conditions, logistics problems experienced due to the Russia-Ukraine war in the recent period. From the perspective of Turkey, factors such as urbanization, migration, change in the structure of labor and income distribution come to the fore. There is a well-known debate in the public about the price changes in the process of reaching the end consumer from the field or manufacturing. In this issue, which was taken into the focus of the research, the existence of a scientific relationship between the prices of agricultural products and food prices was examined and the effect of exchange rates on prices was studied. The included Food Price Index is one of the sub-group indices of the Consumer Price Index calculated monthly by Turkish Statistical Institute within the scope of inflation calculations. The Agricultural Products Producer Price Index, in which the monthly changes in the prices of the goods and services produced by the farmer are officially measured, and the Dollar and Euro exchange rate series are also included in the study. In the analyses, the data of the variables for the period of 2010 January-2022 August were used. The stationarities of the series were examined, and then the possible relationships between the series were analyzed using Engle-Granger, Johansen and ARDL cointegration methods. As a result, statistically significant cointegration and error correction models were obtained between producer prices of Agricultural products, Food prices and Dollar exchange rates. It has been found that food prices are affected by the prices of goods and services offered by the farmer to the market and the dollar exchange rate in the long run, and the exchange rate effect is more important.