Empirical Study of Price Volatility of Staple Foodgrains Commodities During Covid19 in India by GARCH Model using CPI

Abstract

Purpose: India is an agriculture-dominated country having different weather
conditions conducive to producing various types of foodgrain commodities. Despite
good agriculture production as per Economic Survey 2020-21, in particular staple
food grain commodities for every household, the imposition of lockdown from March
2020 onwards during the Covid 19 pandemic has changed the supply and demand
dynamics, thus leading to the price volatility in staple foograin commodities as well
as in concomitant services like health and transportation, etc. which was reflected in
Consumer Price Index collected by ministry of MOSPI, Govt. of India.
Design/ Methodology/ Approach: This study investigates the price volatility of staple
agricultural commodities for household and services, using consumer price index
monthly time-series data (2012 as a base year) obtained from the Reserve Bank of
India from Jan. 2019 to Dec. 2020, and analysis was carried out using econometric
GARCH model followed by stationarity tests, heteroscedasticity test, autocorrelation
test of time-series data for statistical significance.
Findings: The results have shown that some items exhibit significant price volatility
than others for the said duration, and the same is further evident from the sum of α, β
coefficients estimated using Econometric model analysis.
Paper Type: Empirical Research Paper