Impact of food inflation on headline inflation in India



Download 0.7 Mb.
View original pdf
Page1/25
Date21.12.2020
Size0.7 Mb.
  1   2   3   4   5   6   7   8   9   ...   25


IMPACT OF FOOD INFLATION ON
HEADLINE INFLATION IN INDIA
Anuradha Patnaik*
A commonly held belief in the s was that price indices rise because of
temporary noise, and then revert after a short interval (Cecchetti and
Moessner, 2008). Accordingly, policy should not respond to the inflation
because of these volatile components of the price indices. This led to the
development of the concept of core inflation (Gordon, 1975), which is
headline inflation excluding food and fuel inflation. It was strongly believed
that in the long run, headline inflation converges to core inflation and that
there are no second round effects (that is an absence of core inflation
converging to headline inflation. In recent years, however, major
fluctuations in food inflation have occurred. This has become a major
problem in developing countries, such as India, where a large portion of the

Download 0.7 Mb.

Share with your friends:
  1   2   3   4   5   6   7   8   9   ...   25




The database is protected by copyright ©ininet.org 2020
send message

    Main page