Munich Personal RePEc Archive

Drivers and Impact of Food Inflation in India

Bhattacharya, Rudrani and Sen Gupta, Abhijit (2017): Drivers and Impact of Food Inflation in India. Published in: Macroeconomics and Finance in Emerging Market Economies , Vol. 2, No. 11 (May 2018): pp. 146-168.

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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.

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