Gökhan Şahin Güneş
This paper examines the time-varying association between domestic fuel prices and consumer prices in an energy-importing emerging economy. Focusing on Türkiye during the US-Iran conflict, it uses daily consumer price data and a state-space model to estimate oil price pass-through (OPPT) in real time. The estimates suggest that OPPT varies over the sample. Before the conflict, the estimated relationship between domestic pump prices and consumer prices was small and statistically insignificant. The June 2025 episode coincides with a brief increase in the coefficient. A larger and statistically significant increase is observed during the 2026 escalation, which also coincides with the blockade of the Strait of Hormuz and a sharp rise in crude oil prices. The estimate peaks in late March 2026 and remains above its pre-conflict level after the ceasefire. Exchange rate pass-through, also, increases over the sample, indicating that fuel price and currency movements may have jointly contributed to inflationary pressures. The results suggest that imported energy dependence, exchange rate sensitivity, and inflation expectations may shape the persistence of inflationary responses to geopolitical energy disruptions. Also, they point to a possible role for expectation management, exchange rate stability, and transparent, temporary fuel tax smoothing.
pdf. WP202602