The Impact of Oil Price Changes on Spanish and Euro Area Consumer Price Inflation

35 Pages Posted: 11 Oct 2009

See all articles by Luis J. Álvarez

Luis J. Álvarez

Banco de España

Samuel Hurtado

Banco de España

Isabel Sanchez

affiliation not provided to SSRN

Carlos Thomas

Banco de España

Date Written: October 7, 2009

Abstract

This paper assesses the impact of oil price changes on Spanish and euro area consumer price inflation. We find, consistently with recent international evidence, that the inflationary effect of oil price changes is limited, even though crude oil price fluctuations are a major driver of inflation variability. The impact on Spanish inflation is found to be somewhat higher than in the euro area. Direct effects are increasing over time, reflecting the higher spending of households on refined oil products, whereas indirect ones, defined in broad terms, are losing importance.

Keywords: oil prices, consumer price infl ation, Spanish and Euro area inflation, DSGE models

JEL Classification: E2, E31, E37

Suggested Citation

Álvarez, Luis J. and Hurtado, Samuel and Sanchez, Isabel and Thomas, Carlos, The Impact of Oil Price Changes on Spanish and Euro Area Consumer Price Inflation (October 7, 2009). Banco de Espana Occasional Paper No. 0904, Available at SSRN: https://ssrn.com/abstract=1484732 or http://dx.doi.org/10.2139/ssrn.1484732

Luis J. Álvarez (Contact Author)

Banco de España ( email )

Madrid 28014
Spain

Samuel Hurtado

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

HOME PAGE: http://www.bde.es

Isabel Sanchez

affiliation not provided to SSRN ( email )

Carlos Thomas

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

HOME PAGE: http://www.bde.es

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