If taking alcohol and tobacco products into account, prices dropped by 0.58% for a rise of 1% in the share of modern retail.
Over the past 12 years, the retail segment’s expansion has reduced food prices by 34%, if one looks at the growth in market share, or by 25% according to the number of new stores opened, the study says.
Between 2000 and 2011, aggregate food inflation was 113%, according to the study, but would have been 157% in the absence of modern retail. It follows that modern retail has contributed to reducing food prices by 34%, or by 52% during 2006-2011.
Opening a new store lowers inflation by 0.037 percentage points; considering 17 new stores every quarter, the segment’s contribution to reducing food price inflation is 25%, says the study.
Other factors that influence food prices include the cost of raw materials and energy, the share of agriculture in the gross domestic product, the foreign exchange rate and foreign prices. Surprisingly, the study shows prices were not influenced by changes in demand.