Coffee as an Identifier of Inflation in Selected US Agglomerations

Abstract

The research goal presented in this paper was to determine the strength of the relationship between the price of coffee traded on ICE Futures US and Consumer Price Indices in the major urban agglomerations of the United States—New York, Chicago, and Los Angeles—and to predict the future development. The results obtained using the Pearson correlation coefficient confirmed a very close direct correlation (r = 0.61 for New York and Chicago; r = 0.57 for Los Angeles) between the price of coffee and inflation. The prediction made using the SARIMA model disrupted the mutual correlation. The price of coffee is likely to anchor at a new level where it will fluctuate; on the other hand, the CPIs showed strong unilateral pro-growth trends. The results could be beneficial for the analysis and creation of policies and further analyses of market structures at the technical level.

Strategies and Practices for Dealing with Inflation in New York

“…These two not only directly push up the prices of goods and services, thereby increasing the cost of living, but also indirectly affecting consumption and investment behavior. Another Research took advantage of the very close direct correlation between the price of coffee (a commodity) and the Consumer Price Index (CPI) in New York (Pearson's correlation coefficient was 0.61), indicating that changes in commodities prices are reflected in New York's Consumer Price Index (CPI)-an effective indicator of inflationary [2]. The conflict between Russia and Ukraine and the Covid-19 pandemic has fueled the worst inflation in nearly four decades in the U.S. and other developed countries, pointing to misallocation of fiscal relief funds and rising fiscal deficits as the main factors behind the rise in inflation, which rose by as much as 7.7 percentage points [3].…”

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