Monthly WTI crude against official US CPI, 1947-01 to 2026-10. The full-sample correlation of the two year-over-year rates is 0.476 (0.574 since 2000, 0.89 over the trailing 3 years). Oil leads headline CPI by 2 months at peak correlation (r 0.5); the CPI energy index responds within 1 month (r 0.831, full-sample correlation 0.809). Core CPI barely responds (correlation 0.27) — the statistical basis for the Fed looking through oil shocks.
Pass-through, estimated by OLS on the YoY rates: +10% oil ≈ +0.248pp of headline CPI (since 2000, r² 0.33); +2.305pp on the CPI energy index (r² 0.655). Latest readings: WTI averaged $98 in October 2026 so far (daily closes 2026-10-01 to 2026-10-16: EIA spot through 2026-10-14, front-month futures settlements after), +61.57% on the year; headline CPI 3.74% YoY (2026-09), the Nowflation Forecast for October 2026: 3.86% (the in-house model alone 3.97%).
What the TIPS market prices: the 5-year breakeven is 2.37%, the 10-year 2.35%, and the 5-year, 5-year forward — the Fed's long-run anchor gauge — 2.33% (2026-10-16). Over the last three months WTI moved +23.7% while the 5-year breakeven moved +13bps and the 5y5y forward +13bps: long-run expectations are drifting — the 5y5y forward moved with the shock, which is what the Fed watches for. Since 2003 the monthly change in the 5-year breakeven correlates 0.412 with the monthly oil move (0.475 since 2020); the 5y5y forward only 0.275 (0.276 since 2020). Fitted by OLS on monthly changes, a +10% oil move is worth about +8.1bps of 5-year breakeven but only +4.3bps of 5y5y forward — oil moves near-term expectations and barely touches the long-run anchor.
Deflated by the CPI to 2026-09 dollars, WTI is $98 a barrel in real terms today (nominal $98) — the 82nd percentile of every month since 1947, against a real median of $52. The all-time real high was $206 in 2008-06 (nominal $134); the real low $22 in 2020-04. In today's dollars the shocks line up: OPEC embargo $32→$71, Iranian revolution $74→$161, Gulf War $48→$91, Supercycle peak $91→$206, Reopening + Ukraine war $53→$131.
| Shock | Window | WTI move | In today's $ | CPI YoY at start | CPI YoY within a year |
|---|---|---|---|---|---|
| OPEC embargo | 1973-10 → 1974-03 | +135% ($4→$10) | $32→$71 | 7.8% | 12.34% (1974-12) |
| Iranian revolution | 1978-12 → 1980-07 | +166% ($15→$40) | $74→$161 | 9.02% | 14.76% (1980-03) |
| OPEC price war | 1985-11 → 1986-07 | -62% ($31→$12) | $95→$36 | 3.51% | 1.1% (1986-12) |
| Gulf War | 1990-07 → 1990-10 | +93% ($19→$36) | $48→$91 | 4.82% | 6.29% (1990-10) |
| Supercycle peak | 2007-01 → 2008-06 | +145% ($55→$134) | $91→$206 | 2.08% | 5.6% (2008-07) |
| GFC crash | 2008-07 → 2009-02 | -71% ($133→$39) | $204→$62 | 5.6% | -2.1% (2009-07) |
| Shale glut | 2014-06 → 2016-02 | -71% ($106→$30) | $150→$43 | 2.07% | -0.2% (2015-04) |
| COVID collapse | 2020-01 → 2020-04 | -71% ($58→$17) | $75→$22 | 2.49% | 0.12% (2020-05) |
| Reopening + Ukraine war | 2020-11 → 2022-06 | +181% ($41→$115) | $53→$131 | 1.17% | 9.06% (2022-06) |
Method: Pearson correlations and OLS betas on monthly year-over-year rates — WTI monthly average (FRED WTISPLC from 1946; months it has not yet published are the average of daily closes, EIA spot where published and front-month futures settlements after, weekends and exchange holidays left out) vs CPI-U NSA indexes (headline from 1913, core and energy from 1957), all downloadable from the open data directory. Energy is ~6.4% of the CPI basket directly; the indirect channel (freight, airfares, food) roughly doubles the effect. Breakevens are FRED T5YIE, T10YIE and T5YIFR (daily from 2003) averaged to months; their correlations and betas are on month-to-month changes, not levels. Real WTI is each month's price times the latest CPI divided by that month's CPI. Updated every morning by the Nowflation engine.