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The Impact of Supply Chain Disruptions and Global Uncertainty on Inflation Rate in Saudi Arabia

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  • Abdulrahman A. Albahouth

    (Department of Economics, College of Business and Economics, Qassim University, Buraydah 51452, Saudi Arabia)

Abstract

Inflation rate is considered undesirable in the modern globalized world due to its adverse and long-lasting impacts. The Kingdom of Saudi Arabia (KSA, hereafter) has also experienced inflationary pressure during the last few years, specifically post-COVID-19. However, the empirical literature on the determinants of inflation is indeed very scarce in the context of KSA. Amid this backdrop, this research paper aims to figure out the true determinants of inflation by focusing on the role of supply chain disruptions and global uncertainty by focusing on KSA. Quantitative data were collected from credible sources on a monthly basis for the period of 1998M01 to 2024M02 and were analyzed through the “Autoregressive Distributed Lag Model (ARDL)”. Our findings indicate that inflation in KSA is positively impacted by supply chain disruptions, global uncertainty, inflation spillovers from the United States, and money supply in the long run. Similarly, in the short run, only money supply, supply chain disruptions, and global uncertainty are responsible for the prevailing inflation rate in KSA. Moreover, the real effective exchange rate is positively and significantly linked with inflation only in the long run. Furthermore, positive shocks in oil prices cure inflation, while negative shocks in oil prices accelerate inflation in the short run. Our results are expected to shape policy formulation regarding the management of the inflation rate in KSA significantly.

Suggested Citation

  • Abdulrahman A. Albahouth, 2025. "The Impact of Supply Chain Disruptions and Global Uncertainty on Inflation Rate in Saudi Arabia," Risks, MDPI, vol. 13(3), pages 1-15, March.
    • Handle: RePEc:gam:jrisks:v:13:y:2025:i:3:p:54-:d:1614252
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