Consumers’ median year-ahead inflation expectations rose in June to their highest level since the Iran war began in late February, the Federal Reserve Bank of New York said Tuesday.

The increase to 3.7% from 3.5% in May came despite easing fuel prices following the extension of the U.S.-Iran ceasefire announced last month, according to newly released findings from the New York Fed’s monthly Survey of Consumer Expectations.

Interestingly, respondents reported heightened near-term inflation concerns despite diminishing concerns about gas prices, which have been a leading driver of spiking inflation since the conflict in the Middle East began.

The Federal Reserve’s preferred inflation gauge rose 4.1% on a yearly basis in May, well above the U.S. central bank’s stated 2% target and the 2.8% annual growth rate recorded in January and February.

Rising consumer prices and resilient job gains led Fed policymakers to keep the federal funds rate, which functions as the benchmark interest rate of the U.S. economy, within its current target range of 3.5% to 3.75% at their mid-June meeting.

The producer price index (PPI), which measures inflation in the supply chain, showed wholesale good prices jumped 2.8% in May, double April’s pace of 1.9%. More than half of the increase was linked to a 23% gain in the PPI’s gasoline index.

The 0.2-percentage-point rise in one-year inflation expectations set that gauge at its highest level since September 2023. A commensurate 0.2-point rise in three-year inflation outlooks to 3.3% pushed that index to its highest level since June 2022.

As home price appreciation diverges along regional lines amid post-pandemic housing market shifts, consumers also reported lower expectations for home price gains in the year ahead, according to the New York Fed’s survey.

After median expectations for home price gains over the next year rose 3% in April to 3.5% in May, expected appreciation eased back to 3.2% in June. Median three-year price appreciation outlooks also declined, to 4.4% in June from 4.7% in May.

The Conference Board reported in late June that year-ahead inflation outlooks eased among typical consumers, contrasting the New York Fed’s latest findings, with the nonprofit research group reporting slightly stronger consumer confidence overall.