Gas Price Pressures Leave Lasting Mark on Inflation Expectations
A new report from the San Francisco Federal Reserve Bank has found that rising gas prices have a lasting effect on inflation expectations in the US.
The study, which tracked respondents' monthly answers from June 2013 to June 2025, discovered that a 10% change in expected gas price growth was associated with a 0.24% increase in one-year inflation expectations.
This means that when households expect higher gas prices, they tend to anticipate higher inflation as well.
The report's authors noted that the relationship between gas prices and inflation expectations is 'modest, but statistically significant.'
They also found that increases in expected gas price growth comove more strongly with broader inflation expectations than decreases in expected gas price growth, suggesting that inflation expectations may rise as households expect gas prices to climb.