By Harriet Torry

Higher gasoline prices due the conflict in Iran are hitting lower-income households particularly hard, according to new research from the Federal Reserve Bank of New York.

Adjusted for higher prices, wealthy households' spending on gasoline was essentially unchanged in March while low-income Americans decreased their outlays. The New York Fed said low earners, those making less than $40,000 a year, may have switched to cheaper alternatives to driving, like carpooling or public transit.

The report noted that the gap between high and low-income households' spending on gasoline is similar to the one seen in the wake of Russia's 2022 invasion of Ukraine, when fuel costs last spiked, "even though the gap in consumption trends during the current episode is quantitatively larger."

The NY Fed's report is based on prices in March, a month when the average gallon of regular gasoline shot up from just under $3.00 to just over $4.00. Prices are up yet more since then, reaching an average of $4.54 on Wednesday, according to AAA. That marks a 52% increase since the war began.

The report offered fresh evidence of a so-called 'K-shaped' pattern of spending, in which upper-income households, or those making over $125,000 a year, maintain or increase their outlays while lower-income households pull back, pinched by higher prices.

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(END) Dow Jones Newswires

May 06, 2026 15:06 ET (19:06 GMT)

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