Gasoline topped $4.18 a gallon this week — more than a dollar above pre-war levels. That spike arrived as U.S. consumer confidence nudged up to 92.8 in April from 92.2 a month earlier, the Conference Board said. Survey respondents mentioned prices, oil, gas and the war in Iran more often than in prior months, and the jump in pump prices helped push March consumer inflation to a 3.3% year-over-year pace and a 0.9% monthly rise — the largest monthly gain in nearly four years.

Confidence edges up despite fresh fears

The Conference Board's consumer confidence index rose modestly in April to 92.8 from 92.2 in March, indicating Americans are generally carrying on even as worries about prices and geopolitics have increased. The April reading remains close to the lowest levels seen since the COVID-19 pandemic, and survey comments mentioned gas, oil, prices and the war in Iran more often than in prior months.

One narrower measure in the board's report — which gauges short-term expectations for income, business conditions and the job market — climbed 1.2 points to 72.2. That level still sits well below the 80 mark often used as a rough threshold for firmer consumer optimism.

"Consumers are singing the blues," said Heather Long, chief economist at Navy Federal Credit Union. "They aren't happy with high prices for gas, housing, electricity and many other items. It's clear consumers aren't going to feel much better until there's an end to the Middle East conflict."

Fuel spike feeds into inflation readings

Gasoline prices have climbed sharply since the war in Iran began, pushing the national average for a gallon to $4.18 this week — more than a dollar above prices before the conflict and roughly the same level U.S. drivers last saw after Russia's invasion of Ukraine nearly four years ago.

The surge in pump costs helped drive a sharp inflation increase in March. The Labor Department's consumer price figures showed overall prices rose 3.3% from a year earlier, up from 2.4% in February. On a monthly basis, prices jumped 0.9% from February to March — the largest monthly increase in almost four years. Earlier government data for February showed the inflation gauge closely watched by the Federal Reserve was 2.8% higher than a year earlier.

Those moves mark the first inflation readings that fully capture the immediate effects of the Iran war on energy markets, making inflation-fighting more difficult and cutting into real incomes, especially for households that spend a larger share of their budgets on fuel and groceries.

Who feels it most

  • Lower- and middle-income households: Tend to spend a larger share of income on necessities such as fuel, food and rent, so sudden price increases reduce discretionary spending and purchasing power.
  • Businesses reliant on consumer demand: When households cut back on dining out, travel or nonessential goods, affected businesses can see revenue soften, which over time influences hiring and wage decisions.
  • Overall sentiment: The short-term expectations index remaining below 80 signals many consumers are cautious about income and job prospects.

Policy choices and political stakes

The mix of rising inflation and elevated consumer concern is shaping the Federal Reserve's policy calculus. The Fed trimmed its benchmark interest rate three times to close out 2025 to support labor markets, but it has held that rate steady at its last two meetings. Officials were widely expected not to cut rates when they wrapped up a two-day meeting this week.

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The Conference Board's consumer confidence index was 92.8 in April, up from 92.2 in March; gasoline averaged $4.18 a gallon and March CPI rose 0.9% month-over-month.

This article was created with AI assistance.