THE RELATIONSHIP BETWEEN PRODUCTION PRICES, CONSUMER PRICES AND IMPORT PRICES OF AGRICULTURAL PRODUCTS – EVIDENCE FROM KOSOVO

Abstract

This paper examines the relationship between harmonized CPI which means Consumer Price Index, agricultural producer price index (APPI) and import prices for agricultural products in Kosovo. The data utilized in this study were sourced from the Kosovo Agency of Statistics, comprising monthly time series data spanning from January 2015 to December 2022. The research employed various statistical techniques, including unit root tests, cointegration analysis, and a vector error correction model. These methods were applied to analyze the interrelationships among three variables: the Agricultural Producer Price Index (APPI), the Harmonized Consumer Price Index (HCPI), and import prices for agricultural products. Additionally, a Granger causality analysis was conducted to assess any potential causal relationships among these variables. The results showed that HCPI causes APPI, but APPI does not cause HCPI; import causes APPI but APPI does not cause import. Finally, import does not cause HCPI, but HCPI causes import. The paper concludes with relevant policy recommendations.