Exploring Cointegration Between Global and Domestic Prices of Key Edible Oils
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Author: Ramanajneya Reddy Konda, Chiranjit Mazumder, Popavath Bhargav Naik, Subrata Barman and Renjini V.R.
Author Address: Division of Agricultural Economics, Indian Agricultural Research Institute, New Delhi-110012 (Delhi), India
Keywords: Cointegration, domestic prices, edible oils, global prices, price transmission.
JEL Codes: C22, F31, Q11, Q13, Q18.
Abstract
India meets nearly half of its edible oil consumption demand through imports, making domestic prices vulnerable to international market fluctuations. The study examined the relationship between domestic and international edible oil prices using cointegration analysis. Secondary monthly data from January 2010 to May 2024 were obtained from the Ministry of Consumer Affairs for domestic prices and the World Bank Commodity Price Data for international prices. The results revealed substantial price volatility in both markets, particularly for imported edible oils. All domestic and international wholesale edible oil prices were stationary after first differencing and exhibited strong long-run integration. Pairwise Granger Causality Tests indicated bidirectional causality between domestic and international prices across all edible oils, except sunflower oil, where domestic prices did not influence international prices. The findings offer useful insights for managing international price shocks and stabilising domestic markets.
Description
Indian J Econ Dev, 2026, 22(3), 395-405
https://doi.org/10.35716/IJED-25169