The recent episode of food inflation in India - towards an explanation
Student name: Ms Arti Mohan
Guide: Dr Kavita Sardana
Year of completion: 2012
Host Organisation: TERI University
Abstract: The spate of persistently high food inflation in India during 2004 to 2011
throws light on the fact that the causes of food inflation have undergone tectonic changes. This
paper, therefore empirically examines the relative importance of different sources of food
inflation in India. The study analyzes the short run inflation dynamics using Vector Auto
Regression estimation on monthly data. The Variance Decomposition analysis shows that food
inflation in India is largely due to high Inflation expectations rather than demand overheating.
This suggests that sustained monetary policy will remain a powerful tool in the fight against food
inflation in India.
