The Asymmetric Effect of Oil Prices on Consumer Prices: Asymmetric ARDL (NARDL) Method

Abstract

The aim of this study is to examine the asymmetric effects of oil prices and exchange rates on consumer prices in the Turkish economy. Using the NARDL method and covering the period 1987:Q3–2025:Q1, the study analyzes whether price movements affect consumer prices differently depending on their direction. The results show that increases in exchange rates and oil prices have a stronger effect on inflation than decreases do. In other words, there is an asymmetric relationship between oil prices, exchange rates and consumer prices. In light of these findings, the diversification of energy supply and the promotion of domestic production of intermediate goods are highly important for reducing cost-push inflationary pressures. In addition, adopting a flexible taxation structure, enhancing market competition, and increasing price transparency can improve downward price flexibility. Finally, maintaining a credible monetary policy framework and implementing an effective communication strategy are crucial for keeping inflation expectations under control.

JEL: C32, E31, F31, N70