How Do Households Adjust Food Purchases  to Fuel Prices Shocks? Evidence from France

45 Pages Posted: 26 Jul 2022 Last revised: 21 Mar 2023

See all articles by Ondine Berland

Ondine Berland

INRA-AgroParisTech

Fabrice Etile

Paris School of Economics; INRAE, UMR 1393 PjSE

Date Written: July 5, 2022

Abstract

Shocks in energy prices impact households' disposable income and welfare, with consequences for the acceptance of environmental policies. We examine how households adjust food consumption to such shocks, by estimating the effects of fuel prices on food purchasing patterns in France. Using homescan data, we find an elasticity of total food expenditure of approximately -0.3, mainly through reductions in the unit value of products. We highlight that households adjust more on unit value for fresh fruits and vegetables, and more on volumes for animal proteins and alcohol. They adjust their purchase patterns by restricting the frequency of shopping trips, visiting hard discount stores, substituting among, and buying in bulk. Low-income households do not adjust significantly to fuel price shocks likely because they have already largely exploited these adjustment margins. Thus, they are directly affected by any abrupt increase in fuel prices.

Keywords: Fuel, Food, Scanner data, Consumption, Income effect

Suggested Citation

Berland, Ondine and Etile, Fabrice, How Do Households Adjust Food Purchases  to Fuel Prices Shocks? Evidence from France (July 5, 2022). Available at SSRN: https://ssrn.com/abstract=4173034 or http://dx.doi.org/10.2139/ssrn.4173034

Ondine Berland (Contact Author)

INRA-AgroParisTech ( email )

147 rue de l'Université
Paris Cedex, 75338
France

Fabrice Etile

Paris School of Economics ( email )

48 bd Jourdan
Paris, 75014
France

INRAE, UMR 1393 PjSE ( email )

ENS, 48, Boulevard Jourdan
Paris, 75014
France

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