Abstract
This study seeks to identify the factors affecting food price inflation in Pakistan during 1990–2013. The study applied various econometric tests i.e. Augmented Dickey Fuller, Vector Error Correction model and Johansen co-integration test. The econometric results show that indirect taxes and food exports have positive and significant impact on food price inflation while government subsidy and GDP are negatively correlated with food price inflation in Pakistan. The Johansen co-integration test also shows long-run relation of indirect taxes, food export and subsidy with food price inflation. It is recommended that government should give attention to the agricultural sector and also reduce the taxes on food items.
Highlights
Controlling food price inflation is make one of the big task for policy makers. This job is complex as they require thinking a number of Structural, demand, and external, determinants that are involved in planning food prices including, Gross Domestic Product (GDP) growth rate, taxes, subsidies, the quantity of food, Food exports and imports, in that particular year as well as in the previous years
Data Sources The fundamental aim of the study is to quantify the impact of GDP, Subsidy, indirect Taxes and Food export on Food price inflation
The major objective of this paper is to examine the main factors affecting food price inflation in Pakistan
Summary
It is the problem of less developed countries, at affected the developed countries of the world economy. Controlling food price inflation is make one of the big task for policy makers. This job is complex as they require thinking a number of Structural, demand, and external, determinants that are involved in planning food prices including, GDP growth rate, taxes, subsidies, the quantity of food, Food exports and imports, in that particular year as well as in the previous years.
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