Import price effects on retail prices in the US and abroad : two cases

I utilize the highly disaggregate EIU CityData and present some preliminary results looking at how retail prices of two goods almost exclusively imported, bananas and virgin olive oil, are affected by import prices of these goods; from another perspective, I consider how distributor margins respond to changes in import prices. To avoid dealing with the effects of within-destination-country distance on consumer prices, I consider only prices in cities at or near the port of entry. The findings of limited response are consistent with previous work and raise the issue of implications for welfare effects of trade and exchange rate policy. Given the combination of limited passthrough of import prices into final consumer prices and the likely low price elasticity for specific categories of groceries, the trade flow impacts of international shocks may be quite modest.