May 6 (Reuters) - Surging fuel costs tied to the Middle East war are putting mounting pressure on lower-income households while those better off financially have navigated the situation more easily, a report from the Federal Reserve Bank of New York said.
“Households had very different experiences with gasoline spending” in the wake of the launch of the war in the Middle East that has roiled global supply chains and sent the price of gasoline surging, analysts at the New York Fed wrote in a report released Wednesday.
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In March, wealthier households were able to increase spending to match higher gasoline prices but keep their real consumption levels steady, while low-income households saw nominal spending surge while decreasing real consumption of gasoline, the report said.
Lower-income households may have responded to the energy price surge via moving to less costly options, “potentially by carpooling or substituting to public transit where available,” the blog post said.
The blog posting noted the current experience echoes the last energy price shock seen four years ago when Russia invaded Ukraine but now, the gap in consumption trends faced by income levels is “quantitatively larger.”
The New York Fed report is part of a series of work by the bank’s analysts over recent days that has looked at diverging economic prospects between high and low-income households in the U.S.
American households are facing considerable pressure from surging gasoline prices, which are pushing up inflation from already high levels.
Reporting by Michael S. Derby; Editing by Chizu Nomiyama
