Consumers brace for higher gas prices

Consumers expect already elevated gasoline prices to rise another 9.4% in the coming year, the highest projection in four years, based on the latest national survey of expectations by the Federal Reserve Bank of New York. The average U.S. gas price has risen more than 30% since the start of the Iran war on Feb. 28, according to AAA.

The regional Fed’s latest survey of 1,300 household heads, fielded between March 2 and March 31, reflected general concerns about rising prices at a time of increased tensions in the Middle East among other factors. “Respondents were more pessimistic about their future household financial situations,” New York Fed analysts said in a statement Tuesday.

The survey found expectations for finding jobs improved in March, though there was elevated concern about job losses and rising unemployment going forward. Respondents expect overall inflation to be at 3.4% a year from now, based on median figures, up slightly from the February survey. The U.S. government reported annual inflation at 2.4% as of February, with the March figure scheduled to be released Friday.

Consumers’ median year-ahead expected price change for gasoline, at 9.4%, was the highest since the New York Fed’s March 2022 survey and 5.3 percentage points higher than this year’s February survey. It was also higher than consumers’ expected year-ahead price increase for food at 6%, rent at 7.1% and college costs at 9%, though lower than the expected 9.7% hike in healthcare costs.