Brent Crude Oil Prices: Its Effect on Malaysia’s Inflation Rate

Kong, Xin Chong (2026) Brent Crude Oil Prices: Its Effect on Malaysia’s Inflation Rate. Final Year Project (Bachelor), Tunku Abdul Rahman University of Management and Technology.

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Abstract

This study examines the connections between Malaysia's GDP growth, inflation, unemployment, exchange rates, and Brent crude oil prices from 1984 to 2023. The study uses the Autoregressive Distributed Lag (ARDL) model to capture both short-run adjustments and long-run equilibrium linkages, motivated by the conflicting and ambiguous results of previous research. To guarantee a trustworthy and complete dataset, information was gathered from Macrotrends, Statista, FRED, Open DOSM, and World Bank sources. As a result of government subsidies, exchange rate control, and structural features that reduce global shocks, the findings show that Brent crude oil prices and exchange rate fluctuations have negative long-term correlations with inflation in Malaysia. On the domestic front, GDP growth helps maintain price stability by increasing productivity and efficiency, whereas inflation and unemployment have a negative connection that is consistent with the Phillips Curve. In summary, the research explains discrepancies in previous findings, highlights the significance of both local and global forces in influencing inflationary trends, and offers policy-relevant insights for controlling price stability in Malaysia's economy