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The impact of macroeconomic factors on food price inflation: an evidence from India

Author

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  • Asharani Samal

    (University of Hyderabad)

  • Mallesh Ummalla

    (Woxsen University)

  • Phanindra Goyari

    (University of Hyderabad)

Abstract

The present study investigates the impact of macroeconomic factors on food price inflation in India utilizing the monthly time series during January 2006–March 2019. The long-run relationship is confirmed among the variables using the ARDL bounds testing approach to cointegration. The coefficients of long-run estimates show that per capita income, money supply, global food prices, and agricultural wages are positively and significantly impacted food price inflation in both the short and long-run. While food grain availability has a negative and significant impact on food price inflation in both the short-run and long run. Further, the short-run estimates revealed that real exchange rate positively impacts food price inflation. However, the coefficient is insignificant in the short-run. The Granger causality estimates show that a short-run bidirectional causality is confirmed among per capita income, the exchange rate, per capita net availability of food grain and food price inflation. Further, there is evidence of unidirectional causality running from global food prices to food price inflation. However, there is no causal relationship running from money supply and agricultural wages to food price inflation in the short-run.

Suggested Citation

  • Asharani Samal & Mallesh Ummalla & Phanindra Goyari, 2022. "The impact of macroeconomic factors on food price inflation: an evidence from India," Future Business Journal, Springer, vol. 8(1), pages 1-14, December.
    • Handle: RePEc:spr:futbus:v:8:y:2022:i:1:d:10.1186_s43093-022-00127-7
    DOI: 10.1186/s43093-022-00127-7
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    2. Sharma, Purushottam & Meena, Dinesh Chand & Anwer, Md. Ejaz, 2024. "Food Price Inflation in India: Determinants and their Asymmetric Impact," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344332, International Association of Agricultural Economists (IAAE).
    3. CHINEZELUM Ezebilo & AKANEGBU Benedict & MUHAMMAD Maimuna Yakubu, 2023. "Effect of Monetary Policy on Food Inflation in Nigeria: A Nardl Structural Approach," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 13(5), pages 1-6.
    4. Shadman Zafar & Mohammad Aarif & Md. Tarique, 2023. "Input subsidies, public investments and agricultural productivity in India," Future Business Journal, Springer, vol. 9(1), pages 1-12, December.
    5. Molnár László & Hajdu Noémi, 2024. "Food consumption patterns and trends in response to inflationary pressures," Prosperitas, Budapest Business University, vol. 11(1), pages 1-13.

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    More about this item

    Keywords

    Food price inflation; Macroeconomic factors; ARDL bounds testing approach; Causality test;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E03 - Macroeconomics and Monetary Economics - - General - - - Behavioral Macroeconomics
    • C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General

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