Oil Price and Inflation in India: Exploring Asymmetric Relationship with the NARDL Approach

Title

Oil Price and Inflation in India: Exploring Asymmetric Relationship with the NARDL Approach

Creator

Suresh G.; Naveen R.; Naveenan R. V.

Description

Understanding the dynamics of oil price volatility is a growing concern for oil-importing economies like India. Literature has examined the relationship between oil price shocks and economic growth with linear and symmetric assumptions. These assumptions mask the real effects on economic indicators with structural rigidity. This study examines whether oil price shocks cause asymmetric effects on inflation in India, and if so, how these effects differ in the short and long run. The study employed the non-linear autoregressive distributed lag model using monthly data from April 1997 to March 2025 of Brent Crude oil and the Wholesale Price Index of India. The results confirm long-run asymmetry, and positive oil price changes have a stronger and persistent effect on inflation. There is no significant short-run asymmetry observed. The error correction term indicates that 42% of long-run disequilibrium is adjusted within a month. Diagnostics and robustness tests confirmed model stability and prediction accuracy, and the result is not influenced by any structural break shocks. The results emphasize the need for an inflation-forecasting model to integrate the asymmetric transmission and to adjust its trading strategies and the fiscal policy. 2026 Fortune Institute of International Business

Source

FIIB Business Review;

Date

01-01-2026

Publisher

Sage Publications India Pvt. Ltd

Subject

asymmetry; emerging economies; India; inflation; NARDL; Oil price

Coverage

Suresh G., Symbiosis Institute of Business Management, Karnataka, Bengaluru, India; Naveen R., Department of Commerce, School of Commerce, Finance and Accountancy, CHRIST (Deemed to Be University), Karnataka, Bengaluru, India; Naveenan R. V., School of Business and Management, CHRIST (Deemed to Be University), Karnataka, Bengaluru, India

Rights

Restricted Access; Hardcopy may be available in the library

Relation

ISSN: 23197145;

Format

online

Language

English

Type

Article

Identifier

https://doi.org/10.1177/23197145261421703

https://www.scopus.com/pages/publications/105032561129?origin=resultslist