Gas Price Pressures Leave Lasting Impact on Inflation Expectations
A new study from the San Francisco Federal Reserve Bank has found that rising gas prices have a lasting impact on inflation expectations.
The report, which analyzed data from June 2013 to June 2025, discovered that households tend to anticipate higher inflation when expecting higher gas prices. In fact, a 10% change in expected gas price growth was associated with a 0.24% increase in one-year inflation expectations.
This means that consumers who expect higher gas prices also tend to anticipate higher inflation. Conversely, decreases in expected gas price growth did not have the same effect on inflation expectations.
The report's findings suggest that gasoline price pressures may leave a more persistent imprint on household inflation outlooks when prices climb than when they subside.