What Matters for Consumer Sentiment? World Oil Price or Retail Gasoline Price?

21 Pages Posted: 22 Jun 2020 Last revised: 20 Mar 2021

See all articles by Sofronis Clerides

Sofronis Clerides

University of Cyprus; Centre for Economic Policy Research (CEPR); University of Bologna - Rimini Center for Economic Analysis (RCEA)

Styliani Iris Krokida

Athens University of Economics and Business - Department of Accounting and Finance

Neophytos Lambertides

Cyprus University of Technology

Dimitris A. Tsouknidis

Athens University of Economics and Business

Date Written: March 20, 2021

Abstract

We investigate the link between oil prices, retail gasoline prices and consumer sentiment in the Euro Area. Our results corroborate existing evidence that both oil and gasoline price shocks have a negative impact on consumer sentiment in the US. Importantly, we find that they operate through different channels. Oil price shocks mostly impact consumers overall economic outlook, while gasoline price shocks impact consumers perceptions of their own financial position. The evidence suggests that consumers perceive the world oil price as a forward-looking macroeconomic indicator, while retail gasoline price affects their current financial position.

Keywords: oil supply and demand shocks; gasoline prices; consumer sentiment; euro area

JEL Classification: G10; G11; G12; G14

Suggested Citation

Clerides, Sofronis and Krokida, Styliani-Iris and Lambertides, Neophytos and Tsouknidis, Dimitris A., What Matters for Consumer Sentiment? World Oil Price or Retail Gasoline Price? (March 20, 2021). Available at SSRN: https://ssrn.com/abstract=3611619 or http://dx.doi.org/10.2139/ssrn.3611619

Sofronis Clerides

University of Cyprus ( email )

75 Kallipoleos Street
P.O. Box 20537
1678 Nicosia
Cyprus
+357 2289 3709 (Phone)
+357 2289 5049 (Fax)

HOME PAGE: http://sofronis.clerides.com

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

University of Bologna - Rimini Center for Economic Analysis (RCEA) ( email )

Via Patara, 3
Rimini (RN), RN 47900
Italy

Styliani-Iris Krokida

Athens University of Economics and Business - Department of Accounting and Finance ( email )

76 Patission Street
GR-104 34 Athens
Greece

Neophytos Lambertides

Cyprus University of Technology ( email )

Limassol, 3603
Cyprus

Dimitris A. Tsouknidis (Contact Author)

Athens University of Economics and Business ( email )

76 Patission Street
GR-104 34 Athens
Greece

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