Impact of Global Food Price Escalation on Inflation in South Asian Countries

Abstract

The aim of this paper is to investigate the impact of global food price escalation on general inflation in South Asian countries for the period 1990 to 2011. Panel data methodology has been utilized for empirical analysis. Results of the study reveal that external factors like global food price inflation and oil prices significantly and positively affect the general inflation in South Asian countries. Inflation is also positively associated with inflation expectations. Real output measured by real GDP of South Asian countries is inversely significant for general inflation. While broad money shows insignificant impact on consumer inflation in South Asian countries. Findings of this study will be helpful for formulating effective monetary and trade policies for the economic stability in the era of trade liberalization.