Can Higher Gasoline Prices Set Off an Inflationary Spiral?

In early 2022, with consumer price inflation already high, a spike in the price of gasoline increased public concerns that the U.S. economy could be in for a repeat of the inflationary spiral that gripped the nation in the 1970s and 1980s. During this period, energy price increases created an environment where rising inflation and rising inflation expectations reinforced one another until a deep economic contraction broke the feedback loop.