Gas Price Expectations Leave Lasting Impact on Inflation Outlooks
A new report from the San Francisco Federal Reserve Bank examines the relationship between gas prices and inflation expectations. The study found that when households expect higher gas prices, their inflation outlooks tend to rise.
Researchers surveyed respondents' monthly answers from June 2013 to June 2025, asking them to predict changes in gas prices over the next year and their overall inflation expectations. A 10% change in expected gas price growth was associated with a 0.24% increase in one-year inflation expectations.
The report's authors caution that expectations may move jointly for other reasons, such as new economic news or shifts in survey respondents. However, they note the relationship between gas prices and inflation is 'modest but statistically significant.'