A Break in the Link Between Gasoline Prices and Inflation Expectations

Jason Brown

Economic Bulletin, 2026, 4

Abstract: Gasoline prices and consumers’ inflation expectations often move in similar directions. Indeed, the correlation between the two increased noticeably over the last several decades. In 2025, however, that relationship changed dramatically: Gasoline prices declined, while inflation expectations increased with the prospects of higher prices coming from tariffs. If the historical relationship had persisted, inflation expectations might have been 1.5 percentage points lower throughout 2025.

Date: 2026
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