Drivers and Impact of Food Inflation in India

Rudrani Bhattacharya and Abhijit Sen Gupta

MPRA Paper from University Library of Munich, Germany

Abstract: Average food inflation in India during 2006 to 2013 was one of the highest among emerging market economies, and nearly double the inflation witnessed in India during the previous decade. In this paper, we analyse the behavior and determinants of food inflation over the recent past. Our main findings include that recent surge in food inflation in India is a result of various factors. On the cost side, agricultural wage inflation is found to be a universal driver of food commodities inflation, as well as the aggregate food inflation. The contribution of agricultural wages has increased significantly in the post MGNREGA era. Fuel inflation has a moderate impact on food inflation and the effects vary across commodities. Our analysis indicates limited role of fuel and international prices, except for in tradeables. Finally, results suggest significant pass-through effects from food to non-food and to the headline inflation.

Keywords: Food inflation; India; Agricultural wage growth; SVAR; SVECM (search for similar items in EconPapers)
JEL-codes: E31 E37 F62 (search for similar items in EconPapers)
Date: 2017, Revised 2017
New Economics Papers: this item is included in nep-agr and nep-mac
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Citations: View citations in EconPapers (3)

Published in Macroeconomics and Finance in Emerging Market Economies 11.2(2018): pp. 146-168

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Journal Article: Drivers and impact of food inflation in India (2018)
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