What Is a Food Price Index?

Food price index is an economic indicator that reflects the changing direction, trend and degree of food price levels in different periods. It is a kind of economic index, usually expressed as the relative number of the relative ratio between the reporting period and the base period. The food price index is a tool for studying the dynamic changes of food prices, and it provides a basis for formulating, adjusting and checking various economic policies, especially price policies.

The food price index is a sub-category of the price index. The price index is divided according to the range it covers:

This article refers to the food classification standards of the National Bureau of Statistics of the People's Republic of China and divides the foods counted in Wuhan Price Information Network into seven categories: oils (rapeseed oil, soybean oil, peanut oil, soybean blended oil), meat and poultry (fresh Pork, fresh beef, fresh lamb, live chicken, chicken), aquatic products (belt fish, grass carp, carp), fresh vegetables (celery, Chinese cabbage, rapeseed cucumber, radish, eggplant, tomatoes, potatoes, etc.), fresh fruits (reeds (Citrus, apple, banana, watermelon), condiments (edible salt, sugar, soy sauce, vinegar), eggs and dairy products (egg, tofu, fresh milk). ^[1]

This paper uses the Census X12 seasonal adjustment multiplication model to seasonally adjust the monthly time series of China's food price index to decompose the seasonal factors. Food price index has obvious seasonal changes. Around January of each year, due to the influence of the Spring Festival holiday consumption factors, food demand increases, driving prices up, and the food price index will have a peak period. After the Spring Festival, people's desire to consume declined, and then entered a trough period. The annual food price index will have a second peak period around July. This year's two peak periods and one trough period are the most important seasonal factors for food price fluctuations, and the fluctuations have been expanding year by year. ^[3]

The issue of food price fluctuations has always attracted much attention. Many scholars have studied it from different angles, but the main research content can be summarized into two categories: ^[1]

Hit a record high in 2013

Rabobank said on September 21 that global food prices may hit record highs in 2013, as drought has dimmed prospects for a bumper harvest and tightened some feed crop inventories, pushing up meat prices. The bank predicts that by the end of June 2013, the food price index of the Food and Agriculture Organization of the United Nations may further increase by 15% to 243 points, which is higher than the peak of 238 points reached in February 2011. The index averaged 213 points in August, unchanged from July.

News from the website of the Ministry of Commerce on the 9th, the prices of edible agricultural products in 36 large and medium-sized cities across the country last week from December 31, 2012 to January 6, 2013 continued to rise. This is the tenth week in a row that food prices have risen since November last year.

Monitoring data show that the average wholesale price of 18 vegetables last week rose by 7.1% month-on-month, and the growth rate increased by 4.2 percentage points. Among them, the prices of white radish, lettuce and winter melon rose by 19.9%, 12.6%, and 11.6%, respectively. The wholesale price of pork rose by 1.1% month-on-month, and the growth rate expanded by 0.2 percentage points; the wholesale prices of beef and lamb meat rose by 0.8% and 0.6%, respectively;

The retail price of eggs rose by 0.2% month-on-month and rose for 7 consecutive weeks. The average wholesale price of eight aquatic products increased by 0.5% month-on-month, of which the prices of kelp, catfish and carp increased by 2.4%, 1.1% and 0.9% respectively. The retail price of grain increased slightly, the price of small-packaged flour rose 0.2% month-on-month, and the price of small-packaged rice remained flat. The retail price of edible oil has risen and fallen, the prices of peanut oil and rapeseed oil have both increased by 0.1% month-on-month, and the price of soybean oil has fallen by 0.2%.

According to statistics, as of last weekend, the static valuation of the food and beverage industry was at a mid-range high level in all Shenwan Tier 1 industries. Vertically, the industry's valuation level is at a historically low level. At present, the food and beverage industry's valuation premium to the CSI 300 Index has reached 80.83%.