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Explaining Inflation in India: The Role of Food Prices

Author

Listed:
  • Mishra, Prachi
  • Roy, Devesh

Abstract

This paper conducts a forensic examination of inflation in India with a focus on food price inflation, using a disaggregated high-frequency commodity-level dataset spanning last two decades. First, we document stylized facts about the behavior of overall, food and non-food inflation. Second, we quantify the contribution of specific commodities to food price inflation. We find animal source foods (milk, fish), processed food (sugar, edible oils), fruits and vegetables (e.g., onions), and cereals (rice and wheat) to be the primary drivers. Finally, we conduct case studies of the top contributors. Combining the insights from macro as well as micro analyses, the paper suggests specific policy implications

Suggested Citation

  • Mishra, Prachi & Roy, Devesh, 2012. "Explaining Inflation in India: The Role of Food Prices," India Policy Forum, National Council of Applied Economic Research, vol. 8(1), pages 139-224.
  • Handle: RePEc:nca:ncaerj:v:8:y:2012:i:2012-1:p:139-224
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    File URL: https://www.ncaer.org/publication/india-policy-forum-2011-12
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    Citations

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    Cited by:

    1. Rudrani Bhattacharya & Abhijit Sen Gupta, 2017. "What Role Did Rising Demand Play in Driving Food Prices Up?," South Asian Journal of Macroeconomics and Public Finance, , vol. 6(1), pages 59-81, June.
    2. Sugandha Huria & Kanika Pathania, 2018. "Dynamics of Food Inflation: Assessing the Role of Intermediaries," Global Business Review, International Management Institute, vol. 19(5), pages 1363-1378, October.
    3. Ginn, William & Pourroy, Marc, 2022. "The contribution of food subsidy policy to monetary policy in India," Economic Modelling, Elsevier, vol. 113(C).
    4. Chakraborty, Lekha & Varma, Kushagra Om, 2015. "Efficacy of New Monetary Framework and Determining Inflation in India: An Empirical Analysis of Financially Deregulated Regime," Working Papers 15/153, National Institute of Public Finance and Policy.
    5. Rudrani Bhattacharya & Abhijit Sen Gupta, 2015. "Food Inflation in India: Causes and Consequences," Working Papers id:7141, eSocialSciences.
    6. Digvijay S. Negi, 2022. "Global food price surge, in-kind transfers, and household welfare evidence from India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2022-006, Indira Gandhi Institute of Development Research, Mumbai, India.
    7. Eichengreen, Barry & Gupta, Poonam & Choudhary, Rishabh, 2021. "Inflation Targeting in India: An Interim Assessment," India Policy Forum, National Council of Applied Economic Research, vol. 17(1), pages 77-141.
    8. Ball, Laurence & Chari, Anusha & Mishra, Prachi, 2016. "Understanding Inflation in India," India Policy Forum, National Council of Applied Economic Research, vol. 12(1), pages 1-45.
    9. Kaushik Basu & C Marks, 2011. "Understanding Inflation and Controlling It," Working Papers id:4481, eSocialSciences.
    10. Weber, Regine, 2015. "Welfare Impacts of Rising Food Prices: Evidence from India," 2015 Conference, August 9-14, 2015, Milan, Italy 211901, International Association of Agricultural Economists.
    11. Negi, Digvijay S., 2022. "Global food price surge, in-kind transfers and household welfare: Evidence from India," World Development, Elsevier, vol. 158(C).
    12. Negi, D., 2018. "Geography and the Welfare Impact of Food Price Shock," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277150, International Association of Agricultural Economists.
    13. Kishore, A. & Birthal, P.S. & Joshi, P.K. & Shah, T. & Saini, A., 2016. "Patterns and Drivers of Dairy Development in India: Insights from Analysis of Household and District-level Data," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 29(1).
    14. William Ginn & Marc Pourroy, 2022. "The Contribution of Food Subsidy Policy to Monetary Policy in India," Working Papers hal-02944209, HAL.
    15. Rudrani Bhattacharya & Abhijit Sen Gupta, 2018. "Drivers and impact of food inflation in India," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 11(2), pages 146-168, May.

    More about this item

    Keywords

    Food; Inflation;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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