Analyzing Food Inflation: Insights from the Khichuri Price Index

By Asif Khan, CFA

Chairman

EDGE AMC Limited

Posted on: 22 May, 2024

Quick update on the food inflation. Previously, we prepared a khichuri (a rice dish with lentils, protein, and some vegetables) price index as a proxy for food prices. This removes the need to prepare a broad basket and decide on weights.

Today we replicated the calculation but created a weekly index instead of a monthly one. In addition, we smoothened the index by using a 12-week moving average.

The khichuri index is more sensitive to changes than a broad food price index. Despite us smoothing it by 12 weeks it cannot be fully used as a replacement. However, it does have information value and can also work as a leading indicator for food prices.

According to the data, food inflation has cooled down substantially. In fact, in one of the variants of the food dish, there has been no price growth in the last 12 months.

The analysis here is done using TCB data. We plan to replicate the index with an alternate data source and see if we see a similar trend.

Chart Source: EDGE Research & Consulting Limited

egg and chicken khichuri index

Tags:
Food Inflation, Khichuri Price Index, Bangladesh Economy, Price Index Analysis, Inflation Trends, Economic Research, EDGE Research, TCB Data, Food Prices, Cost of Living

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