Oil price pass-through into inflation in Spain at national and regional level

Oil price showed sharp fluctuations in recent years which have revived the interest on its effect on inflation rates. In this paper we discuss the relationship between oil price and inflation in Spain. We adjust econometric models to predict the effect of oil price shocks on inflation both at national and regional level and under different scenarios. Our results show that almost half of inflation rates are explained by variations in oil price, that one-year ahead inflation will likely be moderate and that important differences across regions exist.