THE IMPACT OF EXCHANGE RATE AND OIL PRICE SHOCKS ON DISAGGREGATED CONSUMER PRICE INDEXES IN MALAYSIA
DOI:
https://doi.org/10.33736/ijbs.12831.2026Keywords:
Exchange Rate, Oil Price, Disaggregated Consumer Prices, Asymmetric Effect, MalaysiaAbstract
This study explores influence of exchange rate and oil price shocks on total and disaggregated consumer prices in Malaysia in the long run and short run. Moreover, this study examines asymmetric effect of exchange rate and oil price shocks on total and disaggregated consumer prices in Malaysia in the long run and short run. This study uses annual data over the period from 1980 to 2020. The results of the linear autoregressive distributed lags (ARDL) model and nonlinear autoregressive distributed lags (NARDL) model show the impact of exchange rate and oil price differs across different categories of consumer prices and in the long run and short run. An implication is that weak currency or high oil price results higher consumer prices and hence leads to higher inflation in Malaysia. Moreover, there is asymmetric effect of exchange rate and oil price shocks on total and disaggregated consumer prices in Malaysia. Domestic demand, money supply, interest rate and the Asian financial crisis are important in affecting many consumer prices.
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