Abstract:
The paper studies impact of crude oil on inflation (CPI) in India, China and USA. Applying unit root test, co-integration and vector error correction models (VECM), vector auto regression (VAR) and granger causality the econometric research software called EVIEWS 6 was used to apply all those tools successfully to data form 1996–2015 and revels that crude oil prices has the short term relationship and there is unidirectional causality in India. China shows there is positive insignificant short term relationship between the crude oil prices and inflation and USA has no causality but has the positive insignificant short term relationship between crude oil prices and inflation.
