Analysis Of Food Inflation’s Determinants: Evidence From Pakistan

Abstract

Objective: This research intended to quantify the impact of various handles on the food prices in Pakistan. Research Gap: Very rare studies explained the impact of the environmental and economic handles on the food inflation in Pakistan. Methodology: It employed ARDL technique for Analysis and used TSD from 1990 to 2024. The study employed Augmented Dickey-Fuller Test, Bound test, AIC, Autoregressive Distributive Lag model, ECM model and various diagnostic tests, for the analysis of the data. Variables of the Study: The dependent variable is food inflation and independent variables are food imports, food exports, money supply, agricultural output, GDP, tax-to-GDP ratio and Rainfall index. The Main Findings: The results revealed that GDP, money supply, and interest rates influence food prices .Global food prices, crude oil prices, and fertilizer prices contribute to domestic food price inflation. Supply-side factors like food production, agricultural productivity, and supply chain disruptions affect food prices. Demand-side factors such as per capita income, population growth, and consumption patterns also play a role. Practical implications of the Findings: The study suggests that policymakers should focus on enhancing food production, managing macroeconomic variables, improving supply chains, and stabilizing exchange rates to control food price inflation. Additionally, governments should consider implementing policies to increase food grain availability, stabilize real exchange rates, and promote collaborations between researchers and governmental or non-governmental organizations to address food security issues.