Consumer behavior and food prices during the COVID-19 pandemic: Evidence from Chinese cities

Abstract

We find that Chinese consumers responded strongly to government restrictions during the COVID-19 crisis. Our event-study framework shows that emergency declarations raised average food prices by as much as 7.8 standard deviations of the price change distribution, with a much larger effect on non-perishable vegetable prices (e.g., 17.0 standard deviations for Chinese cabbage prices). The effects of lockdowns were smaller but longer-lasting. These results suggest that consumers panic bought non-perishables under emergency declarations while under lockdowns there was a sustained increase in demand for non-perishables. Such consumer behavior likely caused sizable losses in consumer welfare, especially among poor households.