Economic Analysis of Agricultural Production and Inflation in India
Using two decades of Indian inflation data, this study finds a durable long-run link between agricultural production and both consumer and wholesale price inflation — spiking sharply during the 2008 financial crisis and again in 2021, before both measures corrected by 2023.
Key findings
- ▸CPI inflation remained stable (3-6%) until 2007, spiked to roughly 12% during the 2008 global financial crisis, fell below 4% by 2015, then rose again to about 7% in 2021 before stabilizing near 6% by 2023.
- ▸WPI inflation followed a similar pattern, peaking at 9% in 2011, falling into deflation (around -2%) by 2015, then surging sharply to 14% in 2021 before correcting significantly by 2023.
- ▸Food Articles inflation was the most volatile category, peaking at 15.09% in July 2023, while Non-Food Articles inflation stayed persistently negative over the same period.
- ▸Engle-Granger co-integration analysis confirms a statistically significant long-run equilibrium relationship between agricultural production and both CPI and WPI-food 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.
Originally published in International Journal of Aquatic Research and Environmental Studies, 6(S2), 972-980 (2026), under a Creative Commons Attribution (CC BY) license. Republished here with attribution to the original authors and journal.
Cite this paper
Pawan Kumar Sharma (2026). Economic Analysis of Agricultural Production and Inflation in India. Agri Research Journal. https://agriculturejournals.com/papers/economic-analysis-agricultural-production-inflation-india
Read the story
Why India's Food Prices Swing So Much Harder Than Everything Else
A Bareilly College study traces two decades of Indian inflation data to show farm output isn't just correlated with prices — it has a real, statistically durable, long-run grip on them.