Gas Prices Leave Lasting Mark on Inflation Expectations

A new report from the San Francisco Federal Reserve Bank found that rising gas prices have a lasting effect on inflation expectations. 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 consumers who come to expect higher gas price growth also tend to anticipate higher inflation. The report's authors noted that this relationship is 'modest, but statistically significant.'

The study comes as Americans are experiencing higher fuel costs due in part to global energy supply chain disruptions stemming from the war with Iran. According to AAA, the nationwide average for a gallon of regular gas sat at $4.08, roughly 90 cents higher compared to a year ago.