Are Food Prices in the EU Converging? Empirical Evidence from the Log t Test

This paper investigates convergence of prices for nine broadly defined food commodities in the EU. The empirical analysis has been carried out using monthly price indexes over the period 1996 to 2007 and a recently proposed test of convergence which allows for the important case in practice where the price series are characterized by transition dynamics. According to the empirical results, the price dynamics for food are predominately diverging something which is consistent with relevant survey evidence from supermarkets across the EU countries.