The Empirical Research On The Impact Of Agricultural Commodities Price Volatility On Inflation In China

Agriculture as the basic industry of the national economy, the stable operation of macroeconomic particularly important. The prices of agricultural products as the base price of a hundred, it’s fluctuations affect the situation can be described as a whole, related to the vital interests of producers, consumers, industrial producers, related to the stable operation of the economy, building a harmonious society in all aspects. But in recent years, prices of agricultural commodities have suffered a "roller coaster" like volatility,and this is accompanied by the overall price level from rising inflation.Thus,this article is based on agricultural commodities, the price fluctuations on the effects of inflation.First, from the theoretical analysis of the price volatility of agricultural commodities direct and indirect effects on inflation mechanism, followed by empirically test the theoretical analysis content. Construction of price volatility of agricultural commodities index by entropy method, using it to represent our country in recent years, price fluctuations in agricultural commodities, and select consumer price index and producer price index as a measure of inflation, use the modern econometric analysis visa granger causality test confirms that the price fluctuations of agricultural commodities measured the impact of inflation and the impact of their contribution and lag. The empirical results show that static long-term, the price of agricultural commodities fluctuate between inflation and the existence of a stable cointegration, price volatility of agricultural commodities on the CPI contribution of about 0.219803 of PPI’s contribution to 0.327884, ie when 1% of agricultural commodities price volatility will cause fluctuations in the consumer price of about 0.219803%, the producer price of about 0.327884% volatility, fluctuations in the price of agricultural commodities to some extent caused by inflation.From the dynamic point of view, the impact of fluctuations in the price of agricultural commodities to the consumer price index from the first 2-6 start gradually increased until the first seven reached the maximum, decreases from 8 start; on producer price impact index gradually increased from 2-9, know that the first 10 reaches a maximum, followed by a negative influence and gradually return to the origin and gradually subsided. Therefore, the results of our empirical analysis with the previous price for agricultural commodities on inflation coincide transmission mechanism, namely fluctuations in the price of agricultural commodities, will directly and indirectly boost inflation. Inflation occurs, large macroeconomic stability of the country as a whole run, small to very bad consequences resulting personal life of the residents. Therefore, this paper considers the volatility of prices of agricultural commodities to some extent, an increase in inflationary pressures. Finally, from an agricultural point of view, in order to stabilize prices of agricultural products and reduce the inflation targeting policy recommendations.