Gas Price Pressures Leave Lasting Mark on Household Inflation Expectations

A new study from the San Francisco Federal Reserve Bank reveals that rising gas prices have a lasting effect on household inflation expectations. The report, which analyzed data from June 2013 to June 2025, found that a 10% change in expected gas price growth was associated with a 0.24% increase in one-year inflation expectations.

According to the study, households tend to expect higher inflation when they anticipate higher gas prices, but this expectation does not necessarily reverse when gas prices drop. The authors of the report note that the relationship between gas prices and inflation expectations is 'modest, but statistically significant.'

The findings come as Americans are experiencing higher fuel costs due in part to global energy supply chain disruptions stemming from the war with Iran. As of July 2026, the nationwide average for a gallon of regular gas sat at $4.08, while diesel prices reached $5.60 per gallon.