International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

Frequency: 12

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 Volume 12, Issue 8 (August 2025), Pages: 31-41

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 Original Research Paper

The nexus between asymmetric oil price fluctuations and inflation in Saudi Arabia: Evidence from a non-linear ARDL approach

 Author(s): 

 Mustapha Ben Hassine 1, *, Mouldi Ben Amor 2

 Affiliation(s):

  1Department of Economics, College of Business, Imam Mohammad Ibn Saud Islamic University, Riyadh, Saudi Arabia
  2Department of Economics, Faculty of Economic Sciences and Management of Sousse, University of Sousse, Sousse, Tunisia

 Full text

    Full Text - PDF

 * Corresponding Author. 

   Corresponding author's ORCID profile:  https://orcid.org/0000-0002-2267-9478

 Digital Object Identifier (DOI)

  https://doi.org/10.21833/ijaas.2025.08.003

 Abstract

This study examines the impact of oil price shocks on inflation in the Saudi Arabian economy using the Non-linear Autoregressive Distributed Lag (NARDL) approach with annual data from 1975 to 2021. The analysis separates oil price changes into positive and negative components to identify possible asymmetric effects on the consumer price index (CPI). The results reveal significant asymmetry in the relationship between oil prices and inflation in both the short run and the long run. In the short run, CPI increases more rapidly when oil prices fall, while it decreases more slowly when oil prices rise. The findings also show that money supply and the real output gap have a significant positive influence on inflation. These results provide important policy implications, suggesting that contractionary monetary policies are needed to control inflation. Moreover, policymakers should carefully consider oil price fluctuations, particularly during periods of falling oil prices when inflationary pressures may increase. This is especially relevant for Saudi Arabia, where the economy remains highly dependent on oil revenues to support essential public spending.

 © 2025 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license ( http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords

 Oil price shocks, Inflation, Saudi Arabia, NARDL model, Asymmetric effects

 Article history

 Received 12 December 2024, Received in revised form 27 April 2025, Accepted 3 July 2025

 Acknowledgment

No Acknowledgment. 

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Ben Hassine M and Ben Amor M (2025). The nexus between asymmetric oil price fluctuations and inflation in Saudi Arabia: Evidence from a non-linear ARDL approach. International Journal of Advanced and Applied Sciences, 12(8): 31-41

  Permanent Link to this page

 Figures

  Fig. 1  Fig. 2  Fig. 3  Fig. 4  Fig. 5  Fig. 6  Fig. 7  Fig. 8  Fig. 9  Fig. 10  Fig. 11 

 Tables

  Table 1  Table 2  Table 3  Table 4  Table 5  Table 6  Table 7  Table 8  Table 9  Table 10  Table 11 

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