Asymmetric Impact of Oil Price on the Consumer Price Index in Saudi Arabia

Document Type : Research Paper

Author

Faculty of Economics, Oran Fraduate School of Economics, Oran, Algeria.

Abstract

This study aims to examine the impact of oil price variations on the consumer price index (CPI) in Saudi Arabia by employing the Nonlinear Autoregressive Distributed Lag (ARDL) model. The model estimation revealed a nonlinear relationship between the price of oil and the Consumer Price Index (CPI). The long-term estimates' findings indicate a significant impact of oil price variations on the Consumer Price Index (CPI) over an extended period. The research reveals that a partial escalation in oil prices leads to a decrease in the Consumer Price Index (CPI). Likewise, a reduction in oil prices leads to a corresponding decline in the Consumer Price Index (CPI). Based on the findings of the asymmetric impact, it can be observed that long-term variations in global prices, both positive and negative, have implications for the Consumer Price Index (CPI). Specifically, an upward movement in international oil prices is associated with a downward movement in the CPI, whereas a downward movement in oil prices is associated with an upward movement in the CPI.

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References

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Iranian Economic Review
Volume 29, Issue 3 - Serial Number 3
September 2025
Pages 882-904

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