Plunging Crude Oil Prices and Its Effect on Inflation in Pakistan

Abstract

Pakistan has been through many phases of inflation and a tremendous amount of research is conducted. The research gap identified was the effect on inflation in Pakistan by plunging crude oil prices. This research paper focuses the impact of plunging oil prices on the Pakistan’s economy during October 2011 to February 2016 with addition to other determinants of inflation in Pakistan.  Pakistan is not oil producing rather oil-importing country. A major decrease in oil price should lead to low inflation. The findings showed that, the crude oil prices have no effect on the producer price index of Pakistan whereas; global economy has seen a decrease in global inflation.

Keywords: inflation, CPI, PPI, Crude oil prices, Pakistan.