IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/88721.html
   My bibliography  Save this paper

Drivers and Impact of Food Inflation in India

Author

Listed:
  • Bhattacharya, Rudrani
  • Sen Gupta, Abhijit

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.

Suggested Citation

  • Bhattacharya, Rudrani & Sen Gupta, Abhijit, 2017. "Drivers and Impact of Food Inflation in India," MPRA Paper 88721, University Library of Munich, Germany, revised 2017.
    • Handle: RePEc:pra:mprapa:88721
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/88721/1/MPRA_paper_88721.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rudrani Bhattacharya, 2016. "How does Supply Chain Distortion affect Food Inflation in India?," Working Papers id:11261, eSocialSciences.
    2. Jayatilleke S. Bandara, 2013. "What is Driving India’s Food Inflation? A Survey of Recent Evidence," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 14(1), pages 127-156, March.
    3. Clément Imbert & John Papp, 2012. "Equilibrium Distributional Impacts of Government. Employment Programs: Evidence from India's Employment Guarantee," PSE Working Papers halshs-00680451, HAL.
    4. 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.
    5. 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.
    6. Jushan Bai & Pierre Perron, 1998. "Estimating and Testing Linear Models with Multiple Structural Changes," Econometrica, Econometric Society, vol. 66(1), pages 47-78, January.
    7. Erlend Berg & Sambit Bhattacharyya & Rajasekhar Durgam & Manjula Ramachandra, 2012. "Can Rural Public Works Affect Agricultural Wages? Evidence from India," CSAE Working Paper Series 2012-05, Centre for the Study of African Economies, University of Oxford.
    8. Aoki, Kosuke, 2001. "Optimal monetary policy responses to relative-price changes," Journal of Monetary Economics, Elsevier, vol. 48(1), pages 55-80, August.
    9. Nikos Alexandratos, 2008. "Food Price Surges: Possible Causes, Past Experience, and Longer Term Relevance," Population and Development Review, The Population Council, Inc., vol. 34(4), pages 663-697, December.
    10. Sen Gupta, Abhijit & Bhattacharya, Rudrani & Rao, Narhari, 2014. "Understanding Food Inflation in India," MPRA Paper 58319, University Library of Munich, Germany.
    11. Ganguly, Kavery & Gulati, Ashok, 2013. "The Political Economy of Food Price Policy: The Case Study of India," WIDER Working Paper Series 034, World Institute for Development Economic Research (UNU-WIDER).
    12. Bhattacharya, Rudrani, 2016. "How does Supply Chain Distortion affect Food Inflation in India?," Working Papers 16/173, National Institute of Public Finance and Policy.
    13. Kavery Ganguly & Ashok Gulati, 2013. "The Political Economy of Food Price Policy: the Case Study of India," WIDER Working Paper Series wp-2013-034, World Institute for Development Economic Research (UNU-WIDER).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Amritkant MISHRA & Ajit Kumar DASH & Amba AGARWAL, 2023. "Quest of dynamic linkages between monetary factors and food inflation in India," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(635), S), pages 199-210, Summer.
    2. Ginn, William & Pourroy, Marc, 2022. "The contribution of food subsidy policy to monetary policy in India," Economic Modelling, Elsevier, vol. 113(C).
    3. Choudary Ihtasham Ali & Sami Ullah & Umar Ijaz Ahmed & Irfan Ahmad Baig & Muhammad Arqam Iqbal & Amjad Masood, 2022. "Can Food Inflation Be Stabilized By Monetary Policy? A Quantile Regression Approach," Journal of Economic Impact, Science Impact Publishers, vol. 4(3), pages 205-212.
    4. 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.
    5. Shashi & Rajwinder Singh & Piera Centobelli & Roberto Cerchione, 2018. "Evaluating Partnerships in Sustainability-Oriented Food Supply Chain: A Five-Stage Performance Measurement Model," Energies, MDPI, vol. 11(12), pages 1-18, December.
    6. Abdul-Aziz Iddrisu & Imhotep Paul Alagidede, 2021. "Asymmetry in food price responses to monetary policy: a quantile regression approach," SN Business & Economics, Springer, vol. 1(3), pages 1-25, March.
    7. Iddrisu, Abdul-Aziz & Alagidede, Imhotep Paul, 2020. "Monetary policy and food inflation in South Africa: A quantile regression analysis," Food Policy, Elsevier, vol. 91(C).
    8. Choudary Ihtasham Ali & Sami Ullah & Umar Ijaz Ahmed & Abd Ur Rehman & Hafiz Zahid Mehmood & Mudassar Yasin & Mohsin Raza, 2023. "Short and Long Run Effects of Monetary Policy on Food Inflation: A Study of Pakistan," Journal of Economic Impact, Science Impact Publishers, vol. 5(2), pages 146-154.
    9. Amrendra Pandey & Jagadish Shettigar & Amarnath Bose, 2021. "Evaluation of the Inflation Forecasting Process of the Reserve Bank of India: A Text Analysis Approach," SAGE Open, , vol. 11(3), pages 21582440211, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rudrani Bhattacharya & Abhijit Sen Gupta, 2015. "Food Inflation in India: Causes and Consequences," Working Papers id:7141, eSocialSciences.
    2. Ginn, William & Pourroy, Marc, 2022. "The contribution of food subsidy policy to monetary policy in India," Economic Modelling, Elsevier, vol. 113(C).
    3. 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.
    4. William Ginn & Marc Pourroy, 2022. "The Contribution of Food Subsidy Policy to Monetary Policy in India," Working Papers hal-02944209, HAL.
    5. Sen Gupta, Abhijit & Bhattacharya, Rudrani & Rao, Narhari, 2014. "Understanding Food Inflation in India," MPRA Paper 58319, University Library of Munich, Germany.
    6. 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.
    7. Mushtaq Ahmad Malla, 2020. "MGNREGA in Kashmir: An Analysis of Labour Market Outcomes and Livelihood Security," Indian Journal of Human Development, , vol. 14(3), pages 424-446, December.
    8. Manisha Shah & Bryce Millett Steinberg, 2017. "Drought of Opportunities: Contemporaneous and Long-Term Impacts of Rainfall Shocks on Human Capital," Journal of Political Economy, University of Chicago Press, vol. 125(2), pages 527-561.
    9. Thiemo Fetzer, 2014. "Can Workfare Programs Moderate Violence? Evidence from India," STICERD - Economic Organisation and Public Policy Discussion Papers Series 053, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    10. Anand, Mukesh Kumar, 2016. "Reforming fossil fuel prices in India: Dilemma of a developing economy," Energy Policy, Elsevier, vol. 92(C), pages 139-150.
    11. Narayanamoorthy, A. & Bhattarai, Madhusudan, 2013. "Rural Employment Scheme and Agricultural Wage Rate Nexus: An Analysis across States," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 26(Conferenc).
    12. Thiemo Fetzer, 2014. "Can Workfare Programs Moderate Violence? Evidence from India," STICERD - Economic Organisation and Public Policy Discussion Papers Series 53, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    13. Bhattacharya, Rudrani & Chowdhury, Sabarni, 2021. "How effective is e-NAM in integrating food commodity prices in India? Evidence from Onion Market," Working Papers 21/336, National Institute of Public Finance and Policy.
    14. Sinduja Srinivasan, 2014. "Impact of Public Works on Household Occupational Choice Evidence from NREGS in India," Working Papers WR-1053, RAND Corporation.
    15. Trivelli, C. & Clausen, J. & Vargas, S., 2017. "IFAD RESEARCH SERIES 9 - Social protection and inclusive rural transformation," IFAD Research Series 280047, International Fund for Agricultural Development (IFAD).
    16. K. U. Gopakumar & Vishwanath Pandit, 2017. "Food inflation in India: protein products," Indian Economic Review, Springer, vol. 52(1), pages 157-179, December.
    17. Laura Zimmermann, 2014. "Public works programs in developing countries have the potential to reduce poverty," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-25, May.
    18. Sarbajit Chaudhuri & Sushobhan Mahata & Salonkara Chaudhuri, 2022. "COVID-19 disaster and employment generation program in a developing economy," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(1), pages 46-64, June.
    19. Santangelo, G., 2019. "Firms and Farms: The Local Effects of Farm Income on Firms’ Demand," Cambridge Working Papers in Economics 1924, Faculty of Economics, University of Cambridge.
    20. Kundu, Amit & Das, Sangita, 2018. "Gender Wage Gap in The Agricultural Labor Market of India: An Empirical Analysis," MPRA Paper 95487, University Library of Munich, Germany, revised 10 Feb 2019.

    More about this item

    Keywords

    Food inflation; India; Agricultural wage growth; SVAR; SVECM;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:88721. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.