Consumer Price Index forecasting for the selected South Asian countries- Bangladesh, India, Sri Lanka and Pakistan

Abstract

With a view to forecasting the Consumer Price Index (CPI) of the countries- Bangladesh, India, Sri Lanka and Pakistan, the current study is based on the time-series data from January 2011 to February 2022, January 2011 to October 2021, January 2011 to October 2021 and January 2011 to December 2022 respectively. To model, the behavior of the Consumer Price Index and forecast for the next months developed Autoregressive Integrated Moving Average (ARIMA), better known as BOX-Jenkins models, are applied to the time series data with the help of Eviews-9. Stationary test, correlogram test, and ARMA structure are checked for the best-fitted model for forecasting. Based on Akaike info criterion (AIC), Schwarz criterion (SC) & S.D. dependent var (∂2), Durbin Watson and adjusted R2 criteria ARIMA (4,1,1), ARIMA (5,1,2), ARIMA (3,1,3) and ARIMA (12,1,12) respectively for the countries Bangladesh, India, Sri-Lanka and Pakistan are selected for forecasting. The observations of the analysis display the increase in price level for all of the four countries. From the forecast result of the study, it is suggested to take necessary steps for controlling prices for the healthy economy of the countries- Bangladesh, India, Sri Lanka and Pakistan so that the policymakers can make important decisions for the economy of the country.