INVESTIGATION OF THE RELATIONSHIP BETWEEN AGRICULTURAL PRODUCTS-FOOD PRICE INCREASES AND INFLATION

It is very important to determine the economic factors and their effects that cause inflation since these factors have influence on economic decision units. The increase in average food and agricultural products prices over the past few years in our country is considered to be one of the main factors driving inflation upwards. One fifth of the inflation basket of goods is composed of foodstuffs. Therefore, food price movements are of prime importance. In this study, the effects of agricultural products and food price increases on inflation have been determined. The study utilized inflation and food product consumer price index, exchange rate, oil prices and agricultural product price index data for the period of 2003:01-2017: 04. Pesaran, Shin and Smith (2001) bounds test approach was applied in determining the long-term relationship between variables. According to the predicted ARDL model results, there is a long-run relationship between the variables and 1% increase in food prices has increased the consumer price index by 0.79%. Preventing food price increases in the fight against inflation and developing policies in this direction is of great importance in ensuring long lasting price stability in our country