Crude Oil Price and Inflation in Pakistan

Authors

Saba Saleem M.Phil Scholar at Department of Commerce, University of Karachi Author
Khalil Ahmad Ph.D. Scholar at National College of Business Administration & Economics (NCBA&E), Lahore, Pakistan Author

Pakistan, Oil prices,, inflation, exchange rate, interest rate, indirect taxes

Economy of Pakistan has witnessed several inflationary episodes and voluminous literature has been presented in

this regard but no specific attention has been given to the impact of crude oil prices on inflation in Pakistan. This

research is particularly aimed to determine the existence and intensity of relation between crude oil price and

inflation in Pakistan. Moreover the study also investigates other determinants of inflation in Pakistan. Effects of

crude oil price on GDP deflator have been analyzed using time series data from 1979 to 2012. For long run and short

run results Johansen Co-integration techniques have been employed for estimation. The study concludes that Money

Supply, Crude Oil Price, Exchange Rate, Interest rate and Indirect taxes have positive while real GDP has negative

impact on inflation during the study period.