The Impact of Oil Prices on the G7’s Inflation Rate: An Econometric Study for the Period (1986-2016)

Abstract

The study aims at determining the impact of oil prices on the G7 inflation rate, and examining the nature of that impact, whether negative or positive, if existed, during the period from November 1986 to October 2016.The study found that there is a statically significant impact of the oil prices on the G7 inflation rate, and that the relationship between the two variables is not linear: the rate of inflation is affected by oil pricesat price levels below (34.5)$ per barrel negatively. And after this level, the relationship turns positive.