Title:An Investigation on the Impacts of Fuel Carrier Price on the Consumer
Price Inflation in Iran
Volume: 5
Author(s): Nima Norouzi*
Affiliation:
- Department of Energy Engineering and Physics, Amirkabir University of Technology (Tehran Polytechnic), 424 Hafez
Avenue, PO. Box 15875-4413, Tehran, Iran
Keywords:
Fuel prices, gasoline prices, diesel prices, commodity inflation, price growth, inflation.
Abstract:
Introduction: Oil is one of the primary commodities of all countries globally and is, in
essence, the energy base of all that we know as transportation. Therefore, price fluctuations of derivatives,
especially fuel and oil derivatives, are the policymakers’ main concerns because they can
cause serious problems, such as inflation in commodity prices.
Objective: The impact of fuel carriers’ prices on the consumer price index remains a subject of debate
and research. This paper aims to develop a model to define the inflation regime in Iran and
then investigate the impact of gasoline and diesel price on the total inflation rate.
Methods: In this study, using the central bank time series and available data on energy balance and
World Bank data banks, a non-linear distributed online delay regression model is developed to analyze
the relationship between fuel price and essential commodity inflation.
Results: The results show that there is an impact of gasoline prices on inflation. It does not have
much effect in the long term, but diesel can somewhat influence raising prices, which can exacerbate
poverty in the community that needs special attention.
Conclusion: It was also found that increase in diesel’s price is harmful to the economy because it
can stimulate inflation in the long term. However, in the short term, diesel does not cause any significant
inflation in the prices. While gasoline prices can have many short-term social effects, this
paper suggests that the Iranian government's control of diesel fuel prices prevents long-term inflation
and inflation in consumer price rate.