A woman looks over her grocery bill as consumer prices surged 7% over a year as inflation hits 40-year high. New York City, NY, January 13, 2022.

Publication Type

The influence of gasoline and food prices on consumer expectations and attitudes in the COVID era

Joanne Hsu (University of Michigan)
Policy Briefs 24-3
Photo Credit: Sipa USA/Anthony Behar

This publication is part of a PIIE series on “Understanding the COVID Era Inflation.”


Food and gasoline prices are extremely salient to consumers, who regularly purchase these goods, and these prices are highly visible. The shared experience of purchasing food and gasoline makes it no surprise that those prices have been blamed for the relatively dismal consumer views of the economy in 2023 amid strong economic indicators, including slowing inflation, low unemployment, and robust growth. At the same time, consumer inflation expectations have eased during this past year. This Policy Brief investigates the role food and gasoline prices play in influencing consumer inflation expectations and economic sentiment, as measured on the University of Michigan Surveys of Consumers, and focuses on the COVID inflationary episode. The author finds that, although consumer sentiment now appears to be more sensitive to inflation than prior to the pandemic, inflation expectations do not. Even though inflation has waned, consumers still spontaneously comment on the negative impact of high prices on their lives. That said, these persistently negative perceptions about inflation have not translated into persistently high inflation expectations.

Data Disclosure:

The data underlying this analysis are available here [zip].

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