Retail Gasoline Price Pass‑Through to Monthly Inflation Before and After the COVID‑19 Pandemic
DOI:
https://doi.org/10.61173/zvetp535Keywords:
Gasoline Price, Inflation, ARDL, Pass-ThroughAbstract
This paper examines the influence of U.S. gasoline price fluctuations on the CPI before and after the pandemic, focusing on the short period and long run pass-through of gasoline prices to the inflation. Using an ARDL-UECM model to analyze 182 sets of monthly data from 2010 to 2025, this study aims to estimate gasoline prices’ shortterm impact on CPI and their long-term equilibrium. Subsequently, by setting step dummy variables, it compares the COVID-19 pandemic’s effect on this pass-through effect and whether structural changes occurred. Three core conclusions emerge: First, a significant and statistically robust long-term pass-through exists from gasoline price fluctuations to CPI. A 1% increase in gasoline prices raises the CPI by 0.37%. Second, the error correction model indicates there are temporary deviations from long run equilibrium in temporary phenomena that will be corrected at a rate of 1.48% per month. Finally, the study finds that the pandemic shock caused a structural increase in the price level, shifting the long-run equilibrium of the CPI upward by 13.0% post-pandemic. This suggests that the pandemic’s impact did not stop at short-term effects but brought about broader long-term changes.
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