DIFFERENCES AND CONVERGENCE OF CONSUMER PRICES IN THE INTEGRATING EUROPE

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Published:
Jul 18, 2012
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Vol. 99 No. 2 (2012)
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Aldona Zawojska
Wydział Nauk Ekonomicznych, Szkoła Główna Gospodarstwa Wiejskiego w Warszawie
https://orcid.org/0000-0003-3668-0127

DOI: https://doi.org/10.22630/RNR.2012.99.2.15
Keywords : prices, inflation, consumer goods, food, convergence, EU
Abstract
This paper investigates the cross-country disparity and convergence of consumer/food price levels in the European countries concentrating on the EU and EMU member states. The main objective of the study was to test whether consumer prices (including food prices) in the EU are converging towards the law of one price, and whether the EMU advent gave rise to increased convergence of prices and inflation rates in the Eurozone. The whole observation period runs from 1990 to 2012 with a particular focus on the period since the EMU creation in 1999 and the 2004 enlargement of the EU. We used a data set on consumer and food prices from the Eurostat- -OECD PPP Program, and monthly (year to year) estimates of the Harmonized Indices of Consumer Prices (Eurostat) and inflation rates (OECD) for the food group and its specific subgroups. Results indicate on wide differences in consumer/food price levels across the EU with Denmark having (in 2011) the highest price levels and Bulgaria, Poland and Romania having the lowest prices. Also the experience of food price inflation differs markedly across the EU both with respect to its levels and variability. After the accession to the EU, the Central and Eastern European countries experienced the convergence of consumer and food prices. Conversely, after the introduction of the euro, the price convergence across EMU members was nearly absent. The findings do not fully support the hypothesis of the convergence of inflation rates for food group and its subgroups.

Article Details

How to Cite
Zawojska, A. (2012). DIFFERENCES AND CONVERGENCE OF CONSUMER PRICES IN THE INTEGRATING EUROPE. Annals of Agricultural Economics and Rural Development, 99(2), 16–32. https://doi.org/10.22630/RNR.2012.99.2.15
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