Oil Price Pass-Through on Sector-Level Prices: Evidence from Turkey

Mehmet Ekinci and Hülya Saygılı

Business and Economics Research Journal, 2023, vol. 14, issue 3, 321-335

Abstract: As energy dependency is one of the main drivers of rising global inflation, understanding the sectoral outlook for the effects of oil prices on inflation is crucial. This paper investigates oil price pass-through to consumer prices in Turkey utilizing a Phillips Curve estimation approach. Extending the results in the literature, we estimate Brent crude petroleum price pass-through coefficients for the 2-digit sectoral components of the consumer price index. Then, we compare the sector-level pass-through rates to the ones obtained from the headline and core inflation. We also apply a recursive estimation modeling to track pass-through behavior over time for each inflation series. The paper has several conclusions. First, the long-run oil price pass-through to headline inflation is around 7%. Second, pass-through to the core and sectoral inflation rates exhibit a significant amount of variation from headline inflation. Results with core inflation rates depend on whether energy prices are included or excluded from the consumer basket. Third, the sectoral pass-through rate depends on the weight of the energy-related items in that sector. Our findings suggest that the transport sector has the highest degree of pass-through. Fourth, the rate of pass-through to all prices increases following the hikes in inflation rates in September 2018 and October 2021.

Keywords: Brent Crude Oil Prices; Headline Inflation; Core Inflation; 2-Digit Sectoral Consumer Inflation; Oil Price Pass-Through; Phillips Curve (search for similar items in EconPapers)
JEL-codes: C32 E31 Q43 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.berjournal.com/oil-price-pass-through- ... evidence-from-turkey Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:buecrj:0640

Access Statistics for this article

Business and Economics Research Journal is currently edited by Adem Anbar

More articles in Business and Economics Research Journal from Uludag University, Faculty of Economics and Administrative Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Adem Anbar ().