This article examines the passthrough of oil prices to retail petrol prices in Singapore using daily data from 1 January 2016 to 30 September 2023.

We analyse the magnitude and latency of the passthrough from oil price changes to retail petrol price movements, including whether there is evidence of the passthrough of oil price increases to retail petrol price being greater compared to that of decreases (i.e., the “rocket and feather” effect). Our findings show that the cumulative passthrough to retail petrol prices of different grades from a S$1 increase in oil price was S$0.68 to S$0.71, with a latency of more than a week.

Next, we investigate whether the relationship between oil prices and retail petrol prices was affected by the war in Ukraine. First, we examine the passthrough rates before and after the war began on 20 February 2022 and find no statistically significant differences between the two periods. Second, we examine if petrol price adjustments are more likely to occur when there are larger oil price changes, whether increases or decreases. Our findings show that the increase in volatility of oil prices following the outbreak of the war in Ukraine resulted in more frequent retail petrol price changes.

The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the Ministry of Trade and Industry or the Government of Singapore.

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