Characterizing food prices in India

This paper seeks to improve our understanding of the behaviour of wholesale price index (WPI) of 24 selected food products in India over a long period of time. The hypothesis of declining trend in prices is not found for all commodities although we do find that price of food grains exhibit a negative trend as a result of positive productivity shock. Two main finding of this paper in the context of cyclical behaviour of prices are: asymmetry in the duration spent in boom and slump and the fact that the price cycle does not have a consistent shape. This has implications for formulating counter cyclical policies.