Policy

ResponsestoHighEnergyand

FoodPricesDavidAmaglobeli,MengfeiGu,EmineHanedar,

GeeHee

Hong,andCéline

ThévenotWP/23/74IMFWorkingPapersdescriberesearchinprogressby

theauthor(s)andarepublishedtoelicitcommentsandtoencouragedebate.Theviewsexpressed

inIMFWorkingPapersarethoseoftheauthor(s)anddo

notnecessarilyrepresenttheviewsoftheIMF,itsExecutiveBoard,orIMFmanagement.2023MAR?2023InternationalMonetaryFundWP/23/74IMFWorkingPaperFiscalAffairsDepartmentPolicyResponsesto

HighEnergyandFoodPricesPreparedbyDavidAmaglobeli,Mengfei

Gu,EmineHanedar,GeeHee

Hong,CélineThévenot*Authorizedfordistributionby

RodrigoCerdaMarch2023IMFWorkingPapersdescriberesearchinprogressby

theauthor(s)andarepublishedto

elicitcommentsandtoencouragedebate.TheviewsexpressedinIMFWorkingPapersarethoseoftheauthor(s)anddonotnecessarilyrepresenttheviewsoftheIMF,itsExecutiveBoard,

orIMFmanagement.ABSTRACT:Thesurgeinenergyandfoodprices,which

wasamplifiedby

Russia’s

invasionofUkraine,haspromptedaflurryofpolicyresponsesbycountriesduring

2022.Theaimofthesepolicyresponseswastomitigatesocialandeconomicimpactofhigherprices.Inthispaperwedocumentannouncementsofpolicymeasuresbasedonthe

DatabaseofEnergyandFoodPriceActions(DEFPA),which

wasdevelopedbasedontworoundsofsurveyresponsesofIMFcountryteamsconductedinMarch/Apriland

June/Julyof2022.Thepaperalsoprovidesdiscussiononpolicytrade-offswhenconsideringappropriatepolicyresponsesbothforcountrieswithstrongandweaksocialsafetynets.Keypolicymessageisthatprovidingtargetedsupporttohouseholdsintheformofcashtransfersisthemostcost-effectivewayofalleviatingtheburdenonvulnerablehouseholdsandhavetobepreferredoverbroad-basedmechanismsthatpreventinternationalpricestopassthroughtodomesticconsumers.RECOMMENDEDCITATION:Amaglobeli,D.,M.Gu,E.Hanedar,G.Hong,C.Thévenot,2023,“PolicyResponsestoHighEnergyandFoodPrices”,IMFWorkingPaper23/74.JELClassificationNumbers:Keywords:H23,H31,H32,E31Energyprices;foodPrices;costofliving;socialpolicydamaglobeli@;mgu@;ehanedar@;ghong@;cthevenot@Author’sE-MailAddress:WORKINGPAPERSPolicyResponsesto

HighEnergyandFoodPricesPreparedbyDavidAmaglobeli,

MengfeiGu,

EmineHanedar,GeeHeeHong,

andCéline

Thévenot11

Theauthor(s)

wouldliketo

thank

Apostolos

Apostolou,AnilAri,AlbertoBehar,ChristianBogmans,

LahcenBounader,MaureenBurke,Wala’aEl-Barasse,EnriqueFlores,Jean-Jacques

Hallaert,SalmaKhalid,AsaoKohei,ChristinaKolerus,

LucyQianLiu,ThorntonMatheson,JetaMenkulasi,NicolaPierri,

RumitPancholi,Magali

Pinat,AlexanderPitt,ErvinPrifti,NataliaSalazar,GiovanniUgazio,NateVernon,JamesP.

Walsh,Jean-FrancoisWen,

RezaYousefi,

andmanyotherIMFcountryteamsandseveralIMFexecutivedirectorofficesandtheir

authorities

fortheirinputs

andhelpfulcomments.IMFWORKINGPAPERSPolicyResponsestoHigh

EnergyandFoodPricesContentsI.

Introduction

3II.

TrendsinInternational

EnergyandFoodPrices

4III.

SocialImpact

ofHighEnergyandFoodPrices6IV.

AnnouncedPolicyMeasuresandResponses

8A.Pass-throughofEnergyandFoodPrices8B.SurveyofIMFCountryTeamsonPolicyResponses10V.

PolicyDiscussion19A.InduceDemandandSupplyResponses19B.ReduceBurdenonPoorandVulnerableHouseholds

21C.Ensureconsistencywithotherpolicies,includingtheneedformacroeconomicstability

24D.Politicalconsiderationsmay

explainthepolicyresponsestolimitthepass-through24AnnexI.DataCollectionand

Methodology

26AnnexII.ListofMeasures

Announcedin

Response

to

higherEnergyandFoodPrices(January

–June2022)29AnnexIII.ExistingFoodand

EnergySubsidies56AnnexIV.PolicyMeasures

Announced

bytheUKandFrance64A.UnitedKingdom64B.France65References66FIGURES1.InternationalPriceDevelopments

52.ShareofFoodinConsumerBasketandGDPperCapita63.ShareofVariousBudgetComponentsinOverallHouseholdExpenditure84.EstimatesofPass-ThroughofPricesforFuel,byregion95.CorrelationbetweenDomesticandInternationalFood

Prices106.PolicyResponses117.AnnouncedMeasuresbyIncomeGroup128.DistributionofAnnounced

PolicyMeasuresby

Product

139.TargetingofPolicyMeasures1310.SizeandNumberofAnnouncedPolicies,by

Income

Group

14TABLE1.MeasuresAnnouncedbyCountryandbyTypeofMeasures

17INTERNATIONALMONETARYFUND2IMFWORKINGPAPERSPolicyResponsestoHigh

EnergyandFoodPricesI.

IntroductionThesurgeininternationalpricesonenergyandfood,whichwereamplifiedbyRussia’sinvasionofUkraine,triggeredacost-of-livingcrisis,andconstitutedsignificant

terms-of-tradeshockformanycountries.Despitesomemoderationinpricesattheturnof2023,globalpricesonmainproductssuchasenergyandfood,whichaccountforsignificant

sharesofhouseholdconsumption

baskets,remainelevated.Thesedevelopmentshaveadisproportionateimpactonlow-incomehouseholds.During2022,theshocktriggeredswiftpolicyactionsbygovernmentswiththeaimto

mitigatetheimpactonhouseholdsandfirms.Governmentswithexistingbroad-basedpricesubsidiesonenergyandfoodcontinuedmaintainingthesepolicies,withoutnecessarilyannouncingnewdiscretionaryactions,leadingtohigherfiscalcosts.Inthispaperwedocumentpolicyactionsannouncedbygovernmentsinthefirsthalf

of2022tomitigatetheimpactfromhighenergyandfoodpricesonhouseholdsandfirms,withaspecialattentiontofiscalmeasures.Analysisisbasedona

surveyof174IMFcountryteamsconductedintworoundsinAprilandJune/Julyof2022.Over700policyannouncementsarerecordedintheDatabaseofEnergyandFoodPriceActions(DEFPA).Theannouncedmeasuresincluded

thosethat

arerelatedtorevenue(e.g.,

reductioninexcisetaxrate)andexpenditure(e.g.,cashtransfers),below-the-linemeasures(e.g.,loansorguaranteestostate-ownedenergycompanies)andnon-fiscalmeasures(e.g.,export

bans).Thedatabasealso

recordstheexistingsubsidiesforenergyandfood.Toourknowledge,thisdatabasehasoneofthemostextensivecoveragesofthemeasuresannouncedattheglobalscale

relatedtoenergyandfoodpricesurgesin

2022,encompassingallaspectsoffiscal

andnon-fiscalmeasures.Thedatabaserevealsthatmostcountriesannouncedmeasuresaimedatreducingthe

pass-throughoftheincreasein

internationalpricestodomesticprices.Thisoutcomewasoftenachieved

byareductioninconsumptiontaxessuchas

VAT/salestaxandexcisesoroutrightannouncementofpricefreezes.ThemeasuresrecordedinDEFPAtolimitpricepass-throughareconfirmedbyananalysisusingactualpricedata,showingthatinmanycountriestheriseinretailpriceswas

lessthanwhatwouldbeimpliedbytheriseininternationalprices.

Moreover,thepricepass-throughappearstohavedeclined

in2022comparedtothepreviousyearforall

countryincomegroups.Whilemostof

theannouncedmeasureswereuntargeted,advancedeconomies,especiallyinEurope,implemented

asignificantnumberofcash

transfersaimedatsupportinghouseholds.Importantly,therewasadivergenceintermsofthetypeofshocksthatmeasuresfocusedonbyincomegroupandregion.Thatis,mostmeasurestaken

byadvancedeconomiestendedtofocusonaddressingthe

impactfromhigherenergypriceswhilethemeasurestakeninotherregionsandincomegroups,suchasinSub-SaharanAfrica(SSA),MiddleEastandNorthAsia(MENA)andCaucasusandCentralAsia(CCA),mainlyfocusedonresponsestohigherfoodprices.Themostappropriatepolicyis

toprotectthepricesignal,

whileprovidingtargetedsupporttothosewhoaremostaffected.Fromthisperspective,themeasuresthathavebeentakentodampentheprice

pass-throughINTERNATIONALMONETARYFUND3IMFWORKINGPAPERSPolicyResponsestoHigh

EnergyandFoodPricesaresuboptimal(Amaglobeliandothers,2022).Allowing

domesticpricestorise

inline

withinternationalpricessendsasignaltobothconsumersandproducersandhelpsinducedemandandsupplyresponses.Policiesthatlimitthepass-throughresultinbroad-basedsubsidies,whicharecostlyandproviderelieftoeveryone,includingtothosewhodonotneedit.Moretargetedsupporttovulnerablehouseholdsispreferred,especiallyincountrieswith

strongsocialsafetynets.Countrieswith

weakersocialsafetynetscanconsideralternativetargetingapproaches

relying,

forexample,ondigitalsolutionsandbigdatatoprovidetargetedsupport.Itisalsoimportantthatpoliciesadoptedtotacklethecost-of-livingcrisisareconsistentwithothermacroeconomicpolicies.Incurrentcontext,excessivefiscalsupportdoesnotalignwiththegovernments’effortstoachievepricestability.Thesearegeneralconsiderationsand

country-specificcontextwilldeterminethemostappropriatepolicyresponseforthatcountry.Thispaperisorganizedasfollows:in

sectionIIwereview

recenttrendsinenergyandfoodprices.SectionIIIdiscussestheimpactthathighenergyandfoodpriceshadonsocietiesacrosscountries,insectionIVwedocumentannouncementsof

policymeasuresbasedonDEFPA,andinsectionVweprovidegeneralguidancetopolicymakersonhowtomitigatetheimpactonhouseholdsusingfiscalpolicy.II.

Trends

in

InternationalEnergyand

FoodPricesBuoyedbytherecovery

inglobaleconomyaftertheCovid-19pandemicandexacerbatedbyRussia’sinvasionofUkraine,internationalpricesonenergyhadbeenontherise(Figure1a).More

recently,thefearsofglobaleconomicrecession

contributedtosomereductioninenergyprices,whicharenowbelowpreviouspeaks.However,thedeclineinoilpriceshasbeenslowerthanduring2007-08oilpriceshockandthepricesremainelevated(Figure1b).Withthedeclinein

importsofnaturalgasfromRussia,whichaccountedforabout45percentoftheEU’stotalgas

imports,thepricesforgasandelectricityareparticularlyhighinEurope.Internationalfoodpricesstartedtoriseaftermid-2020,drivenbyasurgeincerealpricesandhaveheightenedconcernsoverfoodinsecurityinmany

countries

(Figure1c).Thecerealstakeupaconsiderablepartofhouseholds’dietsandtheirconsumptionspending

inmanydeveloping

countries.Russia’sinvasionofUkraineacceleratedtherisein

cerealandtherebyfoodprices,asbothcountriesaccountforsignificant

sharesintheglobaltradeofwheatandmaize,andsomeotherfooditems.1

Sincethepeakafterthewarstarted,foodprices,aprimedriverofglobalinflationin2022,easedslightlyduringthelastquarterof2022,inpartthankstotheUN-brokeredBlackSeaGrainInitiative,anagreementthatallowedresumptionofUkrainian

grainexports.Nonetheless,despitetherecentdecline,whichhasbeen

relativelyslow,foodpricesremainsignificantlyelevatedcomparedtotheirlong-termaverage(Figure1d).

Upsideriskstopricesoverthemediumterm,1

RussiaandUkraineaccountforone-quarterof

globalwheat,

one-seventhof

corn,andthree-quartersofsunfloweroils

exports.INTERNATIONALMONETARYFUND4IMFWORKINGPAPERSPolicyResponsestoHigh

EnergyandFoodPricesincludingthosestemmingfromclimate

change,arealsosignificant.Moreover,theelevatedlevelsofpricesonfertilizer,whoseproductionprocessis

heavilyenergy-dependent,contributestohigherprices(Figures1eand1f).Theriseinnaturalgasprices,amajorinputfortheproductionofsomefertilizers,

andthedisruptionintradeflows,havecontributedtohigherfertilizerprices.Russia

andBelarusaccountforone-fifthofglobalfertilizerexports(one-thirdofglobaltradeofpotassicfertilizers).Figure1.InternationalPriceDevelopmentsa.InternationalOilandGasPrices(January2000–October2022)b.InternationalOilPricesduringtheLastThreePeaksCrude

Oil

(lhs)Previous

Peak(Crude

Oil)Natural

Gas,European

(rhs)Previous

Peak(Natural

Gas,European)2007/8Peak20010/12PeakCurrentpeak14012010080807060504030201001008060402006040200-12-10-8-6-4-2024681012Jan-2000Jan-2002Jan-2004Jan-2006Jan-2008Jan-2010Jan-2012Jan-2014Jan-2016Jan-2018Jan-2020Jan-2022Monthsbefore/after

peakbeginsSource:IMF’sPrimaryCommodityPrices.Note:Crudeoil(petroleum)

is

thesimpleaverageofthreespotprices;Brent,theWestTexasIntermediate,and

theDubaiFateh.NaturalgaspriceisNetherlandsTTFNaturalGasForwardDayAhead.c.InternationalFoodPricesd.InternationalFoodPricesduringtheLastThreePeaks(Index,2014–16=100;January2000–October2022)FoodPrice

IndexPreviousPeak

(Food)CerealsPrice

IndexPreviousPeak(Cereals)2007/8

Peak20010/12

PeakCurrent

peak2007-08

World

FoodPriceCrisis2010-12

World

FoodPriceCrisisCurrent

foodpriceshock100806040200170150130110907050-12-10-8-6-4-2024681012Jan-2000Jan-2002Jan-2004Jan-2006Jan-2008Jan-2010Jan-2012Jan-2014Jan-2016Jan-2018Jan-2020Jan-2022Months

before/after

peak

beginsSource:UNFoodandAgricultureOrganization.Note:RealFoodpriceindex2014–2016=100,weightedaverageof

meat,dairy,cereals,vegetables,oils,

and

sugar.Cerealpriceindex2014–2016=100,weightedaverageofpriceindexesforwheat,maize,barley,sorghum,

andricemaize,barley,sorghum,

andrice.INTERNATIONALMONETARYFUND5IMFWORKINGPAPERSPolicyResponsestoHigh

EnergyandFoodPricese.InternationalFertilizerPriceIndex(Index,2010=100;January2000

–October2022)f.InternationalFertilizerPricesduringtheLastThreePeaks2007/8

Peak2010-2012

PeakCurrent

Peak3002007-08WorldFoodPriceCrisis2010-12WorldFoodPriceCrisisCurrent

foodpriceshock100806040200256255250200150100500-12-10-8-6-4-2024681012Jan-2000

Jan-2002

Jan-2004

Jan-2006

Jan-2008

Jan-2010

Jan-2012

Jan-2014

Jan-2016

Jan-2018

Jan-2020

Jan-2022Months

before/after

peak

beginsSource:WorldBank,CommodityPriceDataNote:MonthlyindicesbasedonnominalUS

dollars,2010

=100(monthlyseriesareavailableonlyin

nominalUSdollar

terms).III.

SocialImpactof

HighEnergyandFoodPricesSoaringenergyandfoodpricesraisethecostoflivingfor

householdsandthusreduce

theirrealincomes.However,theimpactoftheriseinthecostoflivingisnotuniform,hurtingcertainincomegroupsacrosscountriesandwithin

countriesmoreacutelythanothers.

Acrosscountries,thebudgetshareallocatedtofoodisonaveragehigherinlowincomeanddevelopingcountriesthaninemergingoradvancedeconomies(Figure2).Foodconsumptionaccountsonaverageforabout44percent(andinsomecasesmorethan60percentofhouseholdconsumption)inlowincomeanddevelopingcountries.Thiscomparesto27

percentinemergingeconomiesand16percentin

advancedeconomies.Figure2.Shareof

FoodinConsumerBasketandGDPperCapita(percent,averagesbycountry)80AdvancedEconomiesEmergingEconomies706050403020100Low-incomeCountries500500050000GDP

perCapita,constant

US$

(2017)Source:IMFCPIdatabaseandthe

IMFWEO.Note:Dotsizesrepresentapproximatepercentageofpopulationineachhouseholdincomegroupwithincountrygroupings.INTERNATIONALMONETARYFUND6IMFWORKINGPAPERSPolicyResponsestoHigh

EnergyandFoodPricesWithincountries,foodtakesupaconsiderablyhighershareofhouseholdbudgetforthepooresthouseholdsthanforthosewithhigherincomes

(Figure3).Onaverage,inemerginganddeveloping

countries,householdsinthelowestincomegroupspendsaboutthree-fifthofitstotalexpenditureonfood,comparedwithaboutone-fifthforhouseholdsinthehighestincomegroup.

2

Thispatternalsoholdsinadvancedeconomies.IntheEuropeanUnion,forexample,householdsinthelowestincomequintilespend16percentoftheirbudgetonfood,comparedwith12

percentforthoseinthehighestincomequintile.3

IntheUnitedStates,householdsinthelowestincomequintile

spend27

percentoftheirbudgetonfoodcomparedwith7percentamongtherichestincomequintiles.4

Higherfoodpricescouldhavemorelong-runimplications.Intheabsenceofpolicysupport,poorhouseholdsswitchto

lowerqualitystaplefood,reduceoverallfoodconsumption,

changeintra-householdallocationofresources,disinvestintheir

children,andcut

expenditureonhealthandeducation

(Ruelandothers,2010).Theshareofenergy(electricity,gas,anddomesticfuel)tendstodecreaseinhousehold

consumptionwiththeincreasein

income(Figure3).Thecompositionoftheenergybasketdiffersby

productandacrossregions(Coadyandothers2015).In

low-incomedevelopingcountries,theshareofelectricity,

natural

gas,andfuelfortransportinconsumptionincreaseswithincomelevels,reflectingthegapsinaccess

to

energyutilitiesandcarownership.Bycontrast,theshareofdomesticfuelindomesticconsumptiondecreaseswithincome,asthisisthemostwidespreadsource

ofenergyforthesehouseholds.Inadvancedeconomies,

thepatternisslightlydifferent.Forexample,inEuropeancountries,theshareofspendingonelectricityand

naturalgasamongpoorerhouseholdsisonaveragehigherthanamongricherhouseholdswhiletheshareofspendingontransportfuelsisrelativelyflatacrossconsumptionquintiles(Ariandothers,2022).2

Fourlevelsofconsumptionareused

to

segmentthe

marketineach

country:lowest,

low,middle,andhigher.

Theyarebasedonglobalincomedistributiondata,

whichranktheglobalpopulationby

incomepercapita.Thelowestconsumptionsegmentcorrespondsto

thebottomhalfoftheglobaldistribution,

orthe50thpercentileandbelow;thelow

consumptionsegmenttothe

51th–75thpercentiles;themiddleconsumption

segmenttothe

76th–90th

percentiles;andthe

higherconsumptionsegmenttothe

91stpercentileandabove.Alow-incomehouseholdspendslessthan$2.97

percapitaaday;ahigh-incomehouseholdspendsmorethan$23.03percapitaaday

(source:WorldBank,GlobalConsumptionDatabase)(source:WorldBank,

GlobalConsumptionDatabase).3

Source:Eurostat.4USDA,Bureauof

LaborStatistics.INTERNATIONALMONETARYFUND7IMFWORKINGPAPERSPolicyResponsestoHigh

EnergyandFoodPricesFigure3.Shareof

Various

BudgetComponentsin

OverallHouseholdExpenditureFoodEnergyTransport

Fuel70%60%50%40%30%20%10%0%20%18%16%14%12%10%8%20%18%16%14%12%10%8%6%6%4%4%2%2%0%0%LowestLowMiddle

HigherLowestLowMiddle

HigherLowestLowMiddle

HigherSources:GlobalConsumptionData,WorldBank,

circa2010.Notes:Barsrepresentthe

firstandthirdquartileofthedistribution.Thismeansthat50

percentof

countriesineachgrouplie

intheorangebar.

In

LIDC,householdsinthe

lowestincomegroupspendon

average62%oftheirbudgetonfood.In

emergingmarkets

economies,

householdsinthesameincomegroupspend48

percentof

theirbudget

onfood.I

V.

AnnouncedPolicyMeasuresandResponsesInthissection,wedocument

thechangeintheretailprice

pass-throughofenergyandfoodpricesin2022comparedto2021.Then,we

introducetheDEFPAsurvey,anIMFdesksurveyofthe

announcedgovernmentmeasurestomitigatetheenergyandfoodpricesurges,anddocumentkeytake-awaysfromthesurvey.A.Pass-throughofEnergyandFoodPricesPass-throughofinternationaloilpricestodomesticretailpricesdecreasedforallincome

groupsin2021,withsomeheterogeneityobservedacrosscountries(Figure4).5

IntheleftchartofFigure4(Figure4a),weplotthepass-throughofinternationaloilpricestodomesticretailpricesfromJanuarytoApril2022,comparedtotheannualpass-throughfromDecember2020toDecember2021.IntherightchartofFigure4(Figure4b),wecomparethepreviousyear’spass-throughwiththepass-throughfromJanuarytoJuly

2022.Lookingatthepass-throughfromDecember2020toDecember2021,thepass-throughformainfuelproducts(suchasdiesel)hasbeenthehighestinadvancedeconomiesandthelowestinemerginganddevelopingeconomies.Thelowerpass-throughinemerginganddevelopingeconomiesisexplainedby

theprevalenceofpricesubsidies,especiallyintheMENAand

theSSA.5

Pass-throughoffuelpricesis

defined,

asinAbdallahandothers(2020),

asthechangeinretailfuelpricesdividedby

the

changeininternationalfuelpricesover

thesameperiodwithamonthly

lag,

both

expressedinUSdollarsperliter.Domestic

retailpricesareobtainedfromthe

GlobalPetrolPricesDatabase.Supplycost

is

obtainedfromtheInternationalEnergy

Agency.Therearethreedifferentinternationaloilprices

used

dependingontheregionofthecountry.Atransportationcost

of

$0.10perliteris

addedforallcountriesandanadditionalmarginof

$0.10perliteris

addedtooil-importingcountries.INTERNATIONALMONETARYFUND8IMFWORKINGPAPERSPolicyResponsestoHigh

EnergyandFoodPricesInthefirstfourmonthsof2022,thepass-throughondieselhasbeenlower,onaverage,forallcountryincomegroupscomparedwithlastyearwheninternationalpriceswerealsoincreasing(Figure

4a).Even

advancedeconomieswith

liberalizedpriceshavenotincreasedretailpricestothe

sameextentas

theydid

lastyear.WhiletheSSA,CaucasusandCentralAsia(CCA),MENAandEmergingandDevelopingAsia(EDA)hadlimitedpass-throughinthefirstmonthsafterRussia’sinvasionofUkraine,these

countrieshave

increasedtheirpass-throughinthelatersurvey(uptoJuly)tothelevelbroadly

thesameaslastyear

(Figure4b).

Giventheprevalenceofpricesubsidiesandlimitedfiscalspace,inparticularin

oil-importingcountries,thiscouldindicategovernments’desiretoease

pressuresfromsubsidies.In

contrast,advancedeconomieshavehadlimitedpass-throughevenfurtherthroughouttheyearcomparedtothefirstfourmonthsof2022andthelastyear.Pass-throughfrominternationalfoodpricestodomesticfoodpricesis

typicallylowerforfoodthanforothercommodities(fuelinparticular).Inallregions,thedomesticfoodprice

indexwasmorestronglycorrelatedwithinternationalFAOfoodpriceindexin2021thanin2022(Figure5).In2022,forsome

groupsofcountries,suchasadvancedeconomies,SSA

andLatinAmericaandCaribbean(LAC)thecorrelationofdomesticfoodpriceindexwiththeinternationalfoodpriceindexwasevennegative.Thenegativecorrelationmaysuggestthatpoliciesand/orothercountry-specificfactors(e.g.,agood

agricultureharvest)mayhavedrivendomesticfoodpriceslowerwhile

internationalpriceswereontherise.Figure4.Estimatesof

Pass-ThroughofPricesforFuel,byregionA.Pass-ThroughJanuary-AprilB.Pass-ThroughJanuary-JulyAELACAELACEDAEDAEDEEDESSASSACCA&MENAPOilExportersOilImportersCCA

&MENAPOilExportersOilImporters0.00.20.40.60.81.01.20.00.20.40.60.81.01.2Dec20-Dec21,AverageJan22-Apr22,AverageDec20-Dec21,AverageJan22-Jul22,AverageSource:IMFstaffcalculationsbasedon

the

globalpetrolpricedatabaseandInternationalEnergy

Agency.Note:

AE=advancedeconomy;CCA=CaucasusandCentralAsia;

EDA=Emergingand

Developing

Asia;EDE

=EmergingandDevelopingEurope;LAC

=LatinAmericaandtheCaribbean;MENAP=theMiddleEast,NorthAfrica,Afghanistan,andPakistan;SSA=Sub-Saharan

Africa.INTERNATIONALMONETARYFUND9IMFWORKINGPAPERSPolicyResponsestoHigh

EnergyandFoodPricesFigure5.CorrelationbetweenDomesticandInternationalFoodPricesAECCAEDAEDELACMENAPSSA20222021-0.2-0.10.00.10.20.30.40.5Source:IMFstaffcalculations.B.SurveyofIMFCountryTeamsonPolicyResponsesThedesksurveyofIMFcountryteamshasbeenconductedtoreportdiscretionarypolicymeasuresinresponsetohighenergyandfoodpricesannouncedsinceJanuary2022(seeAnnexI).6

Thesurveyalsoaskedwhetherornottherewereexistingenergyandfoodpricesubsidies.Thesurveyservedas

thebasisforcreatingtheDatabaseonEnergyandFoodPriceActions(DEFPA),whichcovers174countriesrepresenting88percentoftheIMFmembership.Thecountrycoverageisthehighest

amongadvancedandemergingmarketeconomies(90percent)followedbylow-incomedevelopingcountries(80percent).Intotal,thesurveyincludesnearly750announcedmeasuresforallcountries.Thesurveyshowsthatthelargestnumberofmeasuresinresponsetotheriseinenergyandfoodpriceswasannounced

inadvancedeconomies.FromaregionalperspectivethecoverageisthehighestamongEuropeanandCCAcountriesandthelowestinEDA.7Thenumberofmeasuresshouldalsobeassessedconsideringexistingpricesubsidies(Figure6).

Forexample,thenumberofmeasuresinSSA

countriesislow

butatthesametimethepercentageofcountriesinSSAwithexistingenergyorfoodsubsidiesis

high.Therefore,eveniftherearenodiscretionarymeasurestaken,existingsubsidiesinplace

preventorlimitthepass-throughfrominternationalpricestodomesticpriceswherebythereisnoorlessimpactofhigherinternationalpricesonhouseholdsandcompanies.However,maintainingthesepricesubsidieswillbecomemorecostly.AswillbediscussedinsectionIV,thisis

notthe6

The

survey

wasconductedintworounds,

inMarch/April2022andJune/July

2022.

Amorerecentsurvey

wasconducted

atthetime

of

publicationofthispaper.7

Pleasesee

AnnexIfor

thelistof

countrieswithineachregion.INTERNATIONALMONETARYFUND10IMFWORKINGPAPERSPolicyResponsestoHigh

EnergyandFoodPricesappropriatepolicyresponse.

Inadditiontoexisting

subsidies,theabilityofacountryto

implementmeasuresandfiscalspacea