Impact of macro economic variables on consumer price index : a study of Sri Lankan economy 1977-2016

Abstract

This study investigates impact of the macro economic variables on consumer price index SriLankan Economy. At many emerging economies including that of Sri Lanka are relatively limited and required to be repeated as the underlying economic settings of such economies have rapidly changed over the years. Hence, it is necessary to analyze the consumer price index over the years and various factors affecting its performance. This study examines the impact of economic variables on Consumer price index of Sri Lanka over the period 1977-2016. The study made use of secondary data gathered from the Central Bank report of Sri Lanka and data is analyzed by means of, unit root test, Granger Causality test, Correlation and ARDL Regression analysis using Eview10 and regression results suggests that Inflation and GDP variables have significant impact on Consumer price index. From that correlation analysis it is concluded that there is significant relationship between Inflation and Consumer price index.