Impact of Fluctuations in the Prices of Crude Oil on Inflation: Evidence from Jordanian Economy

Inflation remains a major and lasting challenge for the economies of most countries in the world, because of its undesirable effects on economic units. The research aims mainly to study and analyze the impact of fluctuations in the prices of crude oil on inflation in the Jordanian economy. The researchers collect financial data for the period from 1/1/2000 until 31/12/2013 on a monthly basis. The study shows that the inflation rate in the Jordanian economy is not much affected by fluctuations taking place in crude oil prices and gold prices. The results show that the effect after the global financial crisis began in the relationship between the growth of oil prices and gold prices and inflation. This result may be attributable to changes in domestic and international investment environment. The study recommends studying other factors that affect the inflation rate in the Jordanian economy, such as interest rates.