Do food retail prices respond actively to cost changes? This is an important question for both academia and practitioners. Understanding this issue is crucial to reveal whether the food retail market operates efficiently. It is also related to recent public concerns about whether rising food prices are driven by cost changes or other factors, such as market power in the agri-food supply chain. For example, in a monopolistic market, the sole firm might not be willing to pass on cost decreases to retail prices, while it may readily pass on cost increases. Alternatively, it may choose not to alter retail prices at all, adjusting its markup in response to cost changes instead. All this evidence can provide useful insights for government regulations.