Factors of Food Inflation: Evidence from Time Series of Pakistan

Abstract

This study aims to analyze the factors affecting the food price inflation in Pakistan during the period of 1970 to 2017. Annual time series data has been taken for regression analysis. This study has used the independent determinants named as: GDP, food exports, food imports, taxes and money supply to analyze the food inflation. Simple regression technique has been used which employs that, all the determinants effect the food price positively and significantly except money supply which shows negative results. GDP, food export/import, and taxes have been a contributor towards high food inflation whereas money supply causes the reduction in the food prices. It is recommended that special attention has to be paid on exports and imports (food) along with excess money supply in order to overcome food inflation in Pakistan.