Climate Change and Food Price Inflation in African Economies: Does the Trade Partner Hurt?

Abstract

This article examines how climate change of the leading worldwide trade partners of the African economies affects the local food inflation rates in Africa. Initially, the authors compiled data on food inflation in African countries and temperature change from trading partners in the food and agriculture industry. Subsequently, the authors identified the top trading partners for African economies from 2006–2022 through the bilateral trade dataset. The properties of panel vector autoregression (PVAR) and panel Granger causality have been implemented to achieve the main goal of the paper. The findings of this study can be summarized as follows: (1) Climate change in top trading partners of African countries has a detrimental effect on the food prices in the continent. (2) African countries with a high dependence on agriculture imports are more vulnerable to food price shocks resulting from the impacts of climate change in that partner country. (3) Climate change in trade partners who have already established environmentally friendly agricultural practices adversely affects the food indices in Africa, probably due to the significant costs associated with shifting to a green economy. However, international cooperation between different partners mitigates this negative effect. This study offers three main contributions. First, it introduces the role of the top trading partners in shaping local inflation, emphasizing the importance of diversifying agricultural trade sources. Second, it quantifies the positive effect of international cooperation on addressing the climate question, leading to improved global inflation outcomes. Third, the results of this paper provide valuable guidance for governments to face the challenges caused by climate change and inflation, which have emerged as a pressing concern, particularly since the end of the last decade.