Effect of Food Crop Prices on Headline Inflation Case Study: Uganda (2008-2018)

Abstract

As it is in several other countries both industrialized and non-industrialized, advanced and low-level, one of the central objectives of macroeconomic policies in Uganda is to promote economic growth and to keep inflation at a low level. However, there has been substantial debate on whether food crop prices affects headline inflation. growth. Motivated by this controversial, this study examined the impact of food crop prices on headline inflation and established the existence of both long term and short-term relationships between food crop prices and headline inflation. Time-series monthly data for the period 2008 -2018 were used to examine the effect of food crop prices on headline’s-integration technique established the relationship between food crop prices and headline inflation. Results suggest that food crop prices have a direct short term and long-term relationship with headline inflation in Uganda.