Rising Gas Prices Permanently Shift Household Inflation Expectations

A recent study from the San Francisco Federal Reserve Bank found that rising gas prices have a lasting impact on household inflation expectations. The report, which tracked data from June 2013 to June 2025, discovered that when households expect higher gas price growth, they also tend to anticipate higher inflation.

The survey found that a 10% change in expected gas price growth was associated with a 0.24% increase in one-year inflation expectations. In other words, consumers who come to expect higher gas prices also tend to expect higher inflation.

The report's authors noted that this relationship is 'modest but statistically significant.' They also cautioned that the connection between gas prices and inflation expectations may be influenced by other factors, such as new economic news or changes in the survey respondents' demographics.