Energy price shocks and milk price adjustments

ABSTRACT

Much previous research on energy price transmission sheds light on the relationship between oil prices and aggregate commodity prices, such as for agricultural products, or food price indexes. This letter uses data from 12 U.S. cities between 2001 and 2011 to examine how energy prices are transmitted to fluid milk products at the retail level. Results indicate the existence of an asymmetric energy pass-through (a rise is transmitted faster than a fall in prices) and that private label milk products are more insulated from energy price shocks and adjust at similar rate with national manufacturer brands.

KEYWORDS:

• Energy Shock
• Price Adjustment
• National Brand
• Private Label

JEL CLASSIFICATION:

• D4
• L1
• Q1
• Q4

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The null hypothesis is that there is no cointegration. A trend and a constant were included in the tests. The lag length of 2 was chosen based on the values indicated by the average Akaike Information Criterion test (value = 1.75).

Additional information

Funding

This work was supported by the National Institute of Food and Agriculture [1010008] and the Zwick Center for Food and Resource Policy at the University of Connecticut.