Economic Analysis of Agricultural Production and Inflation in India

Abstract

The present study was undertaken to investigate the relationship between the inflation rate and agricultural production, as well as the association between Wholesale Price Index (WPI) inflation for food articles and agricultural output. The analysis was conducted using secondary data obtained from reliable sources, and the Engle and Granger (1987) two step co-integration method was employed to examine the long-term relationship. The analysis shows that CPI inflation was stable until 2007, spiked sharply during the 2007–2010 global financial crisis, and then declined steadily until 2015. Since 2016, it has fluctuated moderately, with a notable peak around 7% in 2021. WPI inflation showed stability until 2007, spiked between 2008–2011, and fell sharply into deflation by 2015. After moderate recovery, it surged to 14% in 2021 before dropping significantly by 2023, reflecting overall volatility with a declining trend.