Inflation Impact on Selected Commodity Prices

Abstract

This study examines the inflation index impact amongst selected commodities namely,Cardamom, Cotton and Mentha OilGold and Silver Crude oil, Bent crude oil and Natural gas Lead, Aluminum and Copper for the period of 5 years from January 2015 to March 2020.  The main objectives for the present study is to assess the impact of inflation on selected commodities and also find the interdependencies of commodities each other, test the co-integration among commodities to find out the causal relationship. The descriptive statistics of the selected commodities identifies that, Most of the variables are positively skewed and commodities like Brent Crowd oil, Cardamom and Natural gas negatively skewed. All variables data set are leptokurtic and Gold and silver platykurtic (Because 2.78 and 2.92 < 3).. The result of ADF Unit Root test presented in table reveled that, all eleven variables are non-stationary (has unit root) at level and becomes stationary at first difference. The Johansen tests of Trace and Maximum Eigen value test which identifies the number of co integration vectors. The test result found that trace statistics value more than Maximum Eigen Statistics, it implies that reject null hyphothesis and clear that maximum variables are co-integrated. Since the variable are co-integrated and has long run association.. In multiple regression analysis The inflation rate impact on individual commodity, there is a significant impact of inflation on some commodities like Aluminium, Cardamom, Copper, Cotton, Crude oil, lead and Silver and there is no significant impact on Brent crowd oil, Gold, Menthe oil and Natural Gas.    .