Abstract
Global oil and food prices shape people’s living costs and purchasing power. These prices increase can intensify inflationary pressures, diminish individuals’ purchasing capacity and potentially affect economic growth. This study intends to explore the responds of the world oil prices and world food prices towards inflation, the impacts of global oil price shocks, world food prices, inflation, towards the economic growth from 2015 to 2022. The study utilizes monthly time series data and applies the vector autoregressive analysis (VAR) and vector error correction (VECM) model. The Granger causality findings of this investigation reveal specific relationships: World oil prices exhibit a oneway causality connection to inflation, world food prices demonstrate a two-way causality relationship with inflation, inflation shows a two-way causality relationship with world food prices, and world food prices have a one-way causality relationship with world oil prices. Consequently, fostering economic stability necessitates coordinated efforts between monetary and fiscal policies to enhance public welfare and elevate the standard of economic growth. Additionally, there is a need to promote energy-saving initiatives. Beyond their efficient and effective impact on the national budget, such initiatives can contribute to reducing inflation.
Keywords: Economic growth, Oil price shock, Inflation, World food price