Food Price Changes, Price Insulation and Poverty

World prices of storable foods tend to be volatile, with occasional intense but short-lived spikes and relatively long periods of below-average prices. Because movements in the domestic prices of staple foods tend are politically sensitive, many governments intervene to reduce the volatility of these prices by insulating their markets from the changes in world prices. While this can be effective in reducing the volatility of domestic prices, the collective impact of these interventions is to increase the volatility of world prices.

Martin W. and Ivanic M. 2015. "Food Price Changes, Price Insulation and Poverty" Ferdi Policy Brief  B134, December 2015