Does global crude oil price transmit an asymmetric shock on food inflation? Evidence from south and southeast Asian economies

Abstract

PurposeThis pragmatic investigation examines the dynamic nexus between crude oil prices and food inflation from South and Southeast Asian perspectives.Design/methodology/approachThis study investigates the asymmetric effects of global crude oil prices on food inflation using a nonlinear autoregressive distributed lag (ARDL) model with monthly data covering the period from May 2012 to April 2022.FindingsThe empirical evidence reveals that international crude oil has a substantial impact on food prices in the majority of countries. Additionally, the relevant outcome documents that the asymmetric effect of global crude oil on food inflation applies to Sri Lanka and Vietnam, while in the other countries, it is symmetric.Research limitations/implicationsConsidering the optimistic outcomes, this empirical investigation is certain to have important shortcomings. Initially, the conclusions drawn from the above findings were based only on detailed assessments of the aforementioned variables' data over a 10-year period. The current scholarly analysis investigates the existence of an asymmetric impact of crude oil on food inflation, limited to six Asian countries. On the other hand, considering a greater number of Asian economies could enhance the analysis’s robustness and precision.Originality/valueThe current research aims to contribute to the existing literature on food inflation and global oil prices in the following ways: First, this study investigates the nexus between global crude oil and food inflation in a novel way, considering the nonlinear relationship between the variables. To figure out the nonlinear relationship or uneven effect of the global oil shock on food prices, we use the nonlinear ARDL model. Secondly, as food inflation is one of the major issues for the South and Southeast Asian economies, this empirical investigation broadens the analysis by incorporating a perspective from South and Southeast Asia, an area largely overlooked by previous researchers. Finally, we are very optimistic about the phenomenal contribution of current analysis to comprehending the conception of oil and food price dynamics from a broader perspective to achieve the Sustainable Development Goal (SDG), which aims for a sustainable resolution to end hunger in all its forms by 2030 and to accomplish food security, especially in emerging economies.