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Inflation forecast with oil price forecast

Jiří Kučera1*iD, Zdenka Pilichová2

  1. Institute of Technology and Business in Presov, Department of Economics, Management and Marketing, Slovakia
  2. Institute of Technology and Business, School of Expertness and Valuation, České Budějovice, Czechia

* Corresponding author: kucera@vste.sk

Abstract

The aim of the work was to map the development of the inflation rate in the Czech Republic and oil prices on world markets in the period from January 2020 to March 2024, and in connection with this development, to create a forecast of the development of the inflation rate in the Czech Republic and oil prices on world markets in the following period, i.e. from April to December 2024. Another aim was to compare both quantities, or rather their development, and to determine whether the inflation rate in the Czech Republic is influenced by the price of oil on world markets. The chosen method for determining the forecasts of the development of both quantities was linear regression. Quantitative content analysis was used to obtain data. The values of the inflation rate and oil prices were subsequently also expressed graphically for better clarity. From May 2022 to August 2022, the inflation rate ranged from 16% to 18%. The price of Brent oil in the same period ranged between CZK 2,374 and CZK 2,613.70. In both cases, it was a sharp increase compared to 2020. Although the curves of both quantities showed a similar trend, a detailed comparison subsequently showed that the price of oil on world markets does not have a direct connection with the inflation rate in the Czech Republic, although it certainly influences it to some extent in certain periods. Both the inflation rate in the Czech Republic and the price of Brent oil on world markets will have a slightly increasing trend until the end of 2024, but will not return to their highs from the summer of 2022. The most significant limitation of this work was the factor of the Russian- Ukrainian conflict, which caused large fluctuations in values, which could have distorted the actual relationship between the two quantities.

Keywords:Inflationoil pricelinear regressioninflation rate developmentforecast

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