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    by: mohit

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    1 : A STUDY OF TRENDS IN FOOD INFLATION Submitted to: Dr. Anurag Pahuja Lect. In management Submitted by: Rahul Arora (2720) Kapil (2722)
    2 : INTRODUCTION Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. A simple commonly used definition of the word inflation is simple “an increase in the price you pay or a decline in the purchasing power of money”. In other words, Price inflation is when prices get higher or it takes more money to buy the same item. Inflation rate of country is the rate at which prices of goods and services increase in its economy.    
    3 :   Food inflation Definition: - Food inflation can be defined as a consistent rise in the price level of all agricultural food items. This rise in price level is neither seasonal nor sudden, it keeps on increasing over a period of time. This is one of the biggest problem faced by the economy. CAUSES OF HIGH FOOD PRICES AND FOOD INFLATION Prices of close substitutes for rice are rising sharply as well: wheat, maize, and soybeans are all at record highs. Three sets of factors must be taken into account in order to explain what is happening to food prices in developing Asia. First is the distinction between structural and cyclical factors; second is the distinction between supply and demand; and third is the relationship between international and domestic markets.   INTRODUCTION
    4 : INTRODUCTION Measures to control food inflation   Monetary Measures: Monetary measures relate to the control in the supply and circulation of money in the country. Bank rate policy: bank rate can be used to control Inflation. Bank rate in the economy affects the rate of interest in case of inflation, the bank rate is increased; it leads to increases in rate of interest and hence the supply of money is controlled. Open market operation: During inflation, the central bank sells govt. securities and price bonds in the open market in order to contract the supply of money. So the aggregate prices will grow less than before and it will help in controlling the money supply. Variable reserve ratio: In order to control inflation, the central bank increases the reservation. By doing so, Banks will have to keep more deposits with central bank and hence money supply in the economy will get reduced. Credit Rationing: when there is inflationary pressure, the state bank adopts the policy of credit rationing.  
    5 : Fiscal Measures Measures in connection with public borrowing public expenditures and public revenues are called fiscal measures. Public borrowing: During inflation, increase the public borrowing, during deflation, decrease in public borrowing. Through this purchasing power of people can be controlled. Public Revenues: in order to control inflation, the revenues are increases by the Govt. Public expenditures: Inflation is also controlled by decreasing the public expenditures by the Govt. Increase in Direct Taxes: the govt. should impose more and more taxes in rich people and collect more and more revenue in order to reduce their disposable income.     INTRODUCTION
    6 : REVIEW OF LITERATURE   (Acharya K.C.S. 1983) Historical evolution of food security and evaluation of the concept of buffer stock policy and its implications, have been by some studies covered various issues relating to provision of food security system in India.   (Mellor, J.W., 1983) Effective demand for food can grow at a rate that can keep pace with population growth. As percapita income rises, population growth also increases. Rising incomes combined with increasing population lead to high demand for food grains, particularly demand for livestock product. In this context food supply has to take a quantitative jump and in addition to increasing domestic food supply, food imports may also become necessary.   (Kumar, Rosengrant, 1994, and Bouis) Four alternative scenario based on four different assumptions about growth of the GDP and the percapita income and further uses four alternative demand models to derive demand elasticities and demand projections for food grains-for the year 2000 and 2010 was worked by Som Schlores.   REVIEW OF LITERATURE
    7 : NEED: The need for research on “A STUDY OF TRENDS IN FOOD INFLATION” arises to fill the gap in various studies with regard to FOOD INFLATION TRENDS. The studies conducted earlier were focusing more on impacts of food inflation and on awareness for food inflation but these were lacking in finding a trend or pattern in food inflation. So to study the direct or a proper trend in food inflation and also a detailed awareness about food inflation, this research has been conducted.   SCOPE OF THE STUDY: Scope of the study is limited to indices of food inflation rates.   OBJECTIVES OF THE STUDY: To study the food inflation in detail. To study the impact of food inflation on general public. To check whether the food inflation follows a definite trend/pattern. NEED,SCOPE AND OBJECTIVES
    8 : RESEARCH DESIGN ANALYTICAL CONCLUSION ORIENTED SAMPLING DESIGN UNIVERSE: Universe of the study included the indices of Indian Food Inflation rate. DATA COLLECTION SECONDARY TOOLS OF ANALYSIS -Tables -Formulas -Run Test for randomness RESEARCH METHODOLOGY
    9 : FOOD INFLATION RATES FROM 7 Jan 2010 - 6 JAN 2011(52 weeks ) FINDINGS
    10 : FINDINGS
    11 : FINDINGS
    12 : FINDINGS
    13 : FINDINGS
    14 : FINDINGS
    15 : Values of variables related to Run Test Test at 5% significance level at = 0.05 using t-table at 10 degrees of freedom The lower limit=18.17 The upper limit=31.87 Analysis and interpretation ANALYSIS AND INTERPRETATION Runs Test= Mean, µ= Standard Error, =
    16 : As observed r lies between the lower limit and the upper limit which means that food inflation trends exhibits the weak form of efficiency. The rates of food inflation followed the non-random pattern in India and change in inflation rate could be predicted but not estimated from the earlier rate changes. The test had been conducted for a period of one year (52 weeks), interpreted that food inflation rate followed a non random pattern in India. The result was tested at 5% significant level, where the result was rejected and it had been interpreted that the food inflation rate changes could be predicted from earlier rates. Notion of the food inflation study showed that food inflation rates absorb new information after a time gape. The present food inflation rate was affected by past changes so a trend can be formed in the inflation rates pattern and the trend helps in predicting the future prospects of food inflation rates. FINDINGS
    17 : FINDINGS The research has been conducted on food inflation to analyze its trend and pattern, the various findings of the research were found out as mentioned below: It is found that food inflation rate can be predicted but not estimated from earlier changes in any meaningful manner. Successive food inflation rate changes are dependent over time and food inflation rate does occur with significant trends or pattern. The run test is applied on the series.  
    18 : CONCLUSION It has been found the study which has been carried out since 52 weeks that the food inflation rates can be predicted and the change in the food inflation rates are gradual and not drastic. It has also been found out that the food inflation rates vary from 8.5 as minimum to 18.32 as maximum during the 52 week span. Study of food inflation rates in India is concerned with the question of whether one can predict future food inflation rate from past rates. In its simple form its state that food inflation rates can be predicted but not estimated from earlier changes in a meaningful manner. It has been found out from the study that there is a regular pattern or trend of change in food inflation rates and it is affected by various policies and factors present in the country.

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