From global energy price shocks to firms’ inflation expectations

This paper provides empirical evidence on a statistically significant pass-through from global energy price shocks to firms’ inflation expectations in an oil-importing country. The results show that the size and duration of the pass-through depend crucially on the current local energy pricing policy. Hence, this policy affects the way firms form inflation expectations. In turn, it may affect the intensity of the pass-through from global energy price shocks to domestic inflation.