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NEW YORK -- The average price for gasoline in the U.S. reached $4 a gallon for the first time, threatening to further shake the confidence of consumers, Bloomberg News reported.
The average price of regular gasoline is up 28 percent from $3.119 a year earlier, according to AAA, which Bloomberg News cited in the report.
"The fact that confidence has gone down as inflation expectations are going up indicates gasoline has been an important driver because it's one of the reasons expectations are rising," Nigel Gault, chief U.S. economist at Lexington, Mass.-based Global Insight Inc., said in a statement.
Consumers -- already flustered by falling home values and a weakening job market -- are cutting spending, according to the report. Consumer confidence in May fell to a 28-year low, as inflation expectations rose to a two-decade high, the report stated, citing last month's Reuters/University of Michigan sentiment survey.
Gault estimated for every sustained 20-cent gain in gas prices, consumer spending growth is cut by a 0.3 percentage point, the report stated.
"There has never been a price like this," industry analyst Trilby Lundberg told Bloomberg News. "Gasoline demand growth has been flat, now it is turning negative and price is the reason."
U.S. gasoline demand fell 4.7 percent from a year earlier during the Memorial Day holiday week, according to MasterCard Inc.'s June 3, SpendingPulse report, which was cited by Bloomberg News.
"Consumers are painfully aware that their living standards are shrinking under the weight of higher food and fuel prices and see little hope for improvement any time soon," Richard Curtin, the director of the Reuters/University of Michigan survey, said in a statement cited by the report.