Do Global Oil Prices Explain Inflation in Bangladesh? Evidence from Annual Data, 1990–2025

Abstract This study examines whether changes in global oil prices are associated with consumer price inflation in Bangladesh once exchange-rate depreciation, money growth, real GDP growth and import openness are taken into account. Annual data for 1990–2025 (36 observations) are analyzed with Dickey–Fuller tests and OLS regression. Inflation, oil-price growth, exchange rate depreciation and real GDP growth are stationary in levels, while M2 growth and the import-to-GDP ratio are not and enter in first differences, which leaves 35 observations. The model has little explanatory power: it is not jointly significant (F(5, 29) = 0.74, p = 0.603) and the adjusted R-squared is negative (−0.040). Oil-price growth has a small negative coefficient (−0.009, p = 0.635), and no other regressor is significant. A Durbin–Watson statistic of 0.98 points to positive serial correlation, so Newey–West standard errors with two lags are also reported, and they leave the conclusions unchanged. The results do not show that world oil prices explain year-to-year inflation in Bangladesh over this period. Administered fuel prices, annual data and omitted domestic factors are possible reasons. The study offers a baseline for later work with monthly data and a richer model.