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Inflation by Producer Price Index – predictive factor for Inflation by Consumer Price Index? The case of Romania

Author

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  • Roxana Cristina VILCU (MANACHE)

    (The Bucharest University of Economic Studies, Romania)

Abstract

Assessment of the Consumer Price Index in time is one of the most used methods for the analysis of inflation, which population have it and perceive with ease about the evolution of prices of goods and services from the consumption basket. According to the theory of the production chain, part of the inflation through Production Price Indices could be transmitted to inflation through Consumer Price Indices, given that consumer prices are calculated based on the prices of production. This is the start hypothesis for the case study undertaken. The material explores the relationship between inflation through producer prices and inflation through consumer prices in our country. The analysis will be applied to monthly data series in the period 2007-2013 in Romania. The aim of the research is to verify in what degree inflation by producer prices can be a predictive factor for inflation by consumer price in the analyzed period. After analyzing the relationship between Consumer Price inflation and Producer Price inflation through statistical and econometric methods (Johansen test, Engle-Granger test and Granger Causality) wasn’t identified any long-term equilibrium relationship between time series analysed.

Suggested Citation

  • Roxana Cristina VILCU (MANACHE), 2015. "Inflation by Producer Price Index – predictive factor for Inflation by Consumer Price Index? The case of Romania," Romanian Statistical Review Supplement, Romanian Statistical Review, vol. 63(2), pages 22-37, February.
    • Handle: RePEc:rsr:supplm:v:63:y:2015:i:2:p:22-37
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    References listed on IDEAS

    as
    1. Tiwari, Aviral Kumar, 2012. "An empirical investigation of causality between producers' price and consumers' price indices in Australia in frequency domain," Economic Modelling, Elsevier, vol. 29(5), pages 1571-1578.
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    3. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    4. Tiwari, Aviral Kumar & Suresh K.G., & Arouri, Mohamed & Teulon, Frédéric, 2014. "Causality between consumer price and producer price: Evidence from Mexico," Economic Modelling, Elsevier, vol. 36(C), pages 432-440.
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    Cited by:

    1. Khalid KHAN & Chi-Wei SU & Nicoleta - Claudia MOLDOVAN & De-Ping XIONG, 2017. "Distinctive Characteristics of the Causality between the PPI and CPI: Evidence from Romania," ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH, Faculty of Economic Cybernetics, Statistics and Informatics, vol. 51(2), pages 103-123.

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    More about this item

    Keywords

    Consumer Price inflation; Producer Price inflation; long-term equilibrium relationship; prices transmission;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other

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