Food infl ation in Lesotho: Implications for monetary policy
The article examines the transmission mechanism between food and nonfood prices in Lesotho within the vector autoregression framework for the period 2003–2012. The results confirm that food inflation in Lesotho is more persistent than nonfood and headline inflation. This implies that shocks to food inflation have had a more lasting adverse impact on food prices than is the case for nonfood inflation. The findings also support the existence of a significant transmission of shocks between food and nonfood prices. As a result, the monetary authorities have to be vigilant when supply shocks hit food, since such shocks could be propagated into nonfood prices and could exert upward pressure on nonfood, headline and core inflation.
Keywords: Core inflation; food inflation; Lesotho; monetary policy; nonfood inflation
To assure the integrity, dissemination, and protection against copyright infringement of published articles, you will be asked to assign us, via a Publishing Agreement, the copyright in your article. Your Article is defined as the final, definitive, and citable Version of Record, and includes: (a) the accepted manuscript in its final form, including the abstract, text, bibliography, and all accompanying tables, illustrations, data; and (b) any supplemental material. Our Publishing Agreement with you will constitute the entire agreement and the sole understanding between you and us; no amendment, addendum, or other communication will be taken into account when interpreting your and our rights and obligations under this Agreement.