Abstract

Agricultural input subsidies are a key government policy instrument in many developing countries, intended to support agricultural production, enhance food security, and moderate food price inflation. In Lesotho, such subsidies have at times covered 70–80 percent of input costs, making them a significant fiscal intervention with expected macroeconomic and welfare effects. This paper evaluates the effectiveness of agricultural input subsidies in containing inflation, directly aligning with the IAOS theme on the role of official statistics in informing government policy.
Using administrative data on subsidy expenditures and official Consumer Price Index (CPI) time series compiled by the national statistical office, the study applies time series trend analysis and correlation techniques to examine the relationship between subsidy intensity, food inflation, and overall inflation. The analysis finds no statistically significant correlation between high subsidy coverage and reduced inflation, indicating that the policy impact on consumer prices is limited.
The results suggest that inflation dynamics in Lesotho are largely driven by external and structural factors, including imported inflation, exchange rate movements, and supply chain constraints, which are not directly addressed by input subsidies. From a statistical perspective, the paper demonstrates how integrating administrative data with price statistics enables systematic evaluation of government interventions beyond headline indicators. The study contributes to IAOS discussions by illustrating the critical role of official statistics in assessing policy effectiveness, supporting evidence-based decision-making, and improving the design of agricultural and inflation-related policies in developing economies.