The Impact of Structural Fluctuations in Global Food Prices on Domestic Inflation Stability in Algeria

Abstract

This paper examines the asymmetric and nonlinear pass-through of global food price fluctuations to domestic inflation in Algeria over 2002Q1-2024Q4. Using the Quantile Autoregressive Distributed Lag (QARDL) framework of Cho, Kim, and Shin (2015), we estimate short- and long-run dynamics across five quantiles of the conditional inflation distribution (τ ∈ {0.10, 0.25, 0.50, 0.75, 0.90}), drawing on quarterly data for CPI, the FAO Global Food Price Index, crude oil prices, the DZD/USD exchange rate, and GDP growth. The Pesaran bounds test confirms long-run cointegration at the 1 percent level. Long-run elasticities range from 0.370 to 0.512 across quantiles, peaking at τ = 0.25 - indicating greater exposure during low-to-moderate inflation episodes than during high-inflation ones, a pattern attributable to the selective activation of government price subsidies. A Wald test for coefficient homogeneity (statistic: 12.456, p = 0.014) rejects uniform pass-through and validates QARDL over conventional OLS. Oil prices exert a consistently negative, stabilizing effect, reflecting their role as a fiscal buffer for food subsidies. Exchange rate depreciation amplifies transmission, particularly at upper quantiles. The findings carry concrete implications for regime-aware monetary and food-security policy in commoditydependent economies