FEDS Note: The Effect of Oil Prices on Core Inflation: Recent Evidence from the Advanced Economies

Fed research finds that oil price increases now have a significantly greater impact on core inflation across major advanced economies than before the pandemic Research: Pass-through from oil prices to core inflation was statistically insignificant before the pandemic but has become significant since Research: Core inflation has also become more persistent, increasing the risk that supply-driven price pressures remain elevated for longer Research suggests the recent rise in oil prices could significantly increase core inflation over the next several years if stronger pass-through and inflation persistence continue Researchers caution that findings remain uncertain and do not represent official Fed inflation forecasts