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Abstract
Against the backdrop of recent price spikes on world commodity markets, retail food inflation has
varied considerably across EU Member States despite the existence of a range of common policies
and, for some Member States, a common currency. In this paper, we investigate the extent and
potential causes of the differences in the experience of food inflation through the lens of a single welldefined
product chain in 11 EU Member States. Using a structural VAR framework, we find that the
contribution of world prices to the behaviour of retail bread prices shows significant differences
across the EU Member States we cover. Differences in the functioning of the food sector (particularly
barriers to competition and vertical control) appear to be correlated with the role played world prices,
highlighting the importance of such structural features in commodity price transmission.