The relationship between fertilizer prices and inflation in Ecuador

Fertilizers and other agricultural inputs have an important role in the agrobusiness production process. However, the interruptions in the sup­ply chains and the increase of the global demand, in 2022, increased the price level of these inputs, making fertilizers more expensive by the main producing and exporting economies of these goods, such as Russia and China. The study analyzes the impact of fertilizer prices on Ecuador´s inflation, a country that mainly imports these inputs and is very sensitive to changes in their prices. To estimate the magnitude and persistence of a price shock, the methodology of local projections, proposed by Jordà (2005), was used. The results suggest that a posi­tive impact on fertilizer prices generates an increase in the Ecuadorian consumer price index and largely persists (over one year). Likewise, it was found that the positive effect of prices predominates the negative one. Finally, this shock in fertilizers exhibited significant effects on the supply side, measured based on the producer price index, where the agricultural and food industries were the most affected, reflecting that the main pass-through to inflation starts with the input costs that producers assume.

• Autor principal: Yaselga Alvarado, Emanuel (author)
• Outros Autores: Bunce, Alan (author)
• Formato: article
• Idioma: spa
• Publicado em: 2023
• Assuntos: Fertilizers; Inflation; Commodities prices; Local projections; Inflation pass-through; Fertilizantes; inflación; Precios de materias primas; proyecciones locales; traspaso de la inflación
• Acesso em linha: https://estudioseconomicos.bce.fin.ec/index.php/RevistaCE/article/view/421