Macroeconomic determinants of inflation rate in Malaysia

The purpose of this study is to investigate the significant relationship between exchange rate, oil price and unemployment with inflation rate in Malaysia. The data collected cover form the year 1985 until 2016 using annually time series data which consist of 32 data observation. Exchange rate, oil price and unemployment were use as independent variable. Unit root test and diagnostic test were being used to test whether it is stationary or non-stationary. The analyses are conducted using multiple linear regression to get the results. Overall, this study achieved the research objectives and research questions where to analyze the significant relationship between macroeconomic determinants with inflation rate in Malaysia. Relationship were tested by using Multiple Linear Regression technique. In this study, confirmed that exchange rate and oil price have a significant positive relationship towards inflation rate in Malaysia. Meanwhile, the result for unemployment is insignificant relationship towards inflation rate in Malaysia. It means that unemployment has no significant effect on Inflation Rate in Malaysia.