Determinants of Food Price Index in Iran: A Quantile Regression Approach

Due to the increase in food prices and limited access to qualified food resources, the impact of various factors on different food price distribution multiplexes was studied in this paper using the quantile regression approach with having capability of identifying nonlinear relationships. This study examines the effect of macro and policy variables such as agricultural value-added, exchange rate, money supply, world food price index, and government support index on Iran's food price index in the period 1383:1 to 1398:4. The results indicate that; the world food price index and exchange rate have a significantly positive non-linear impact on the food price index in all distribution quantiles. While the value-added of the agricultural sector and the government support index have a negative non-linear effect on the dependent variable. All variables in all quantiles had the same sign throughout the distribution, but the intensity of their effect was variable. The effect of the money supply variable was also significantly positive in all quantiles and has a downward slope which shows the existence of a non-linear relationship between this variable and the dependent variable. This variable has had the greatest effect in the first quantiles of food inflation, which shows that this variable is more effective than other variables in lower inflation.