Americans were more worried about inflation in March than at any time in the last 10 months and consumer confidence waned in the wake of higher gasoline prices.
Still, data on Tuesday suggested consumers did not feel the economic recovery was losing momentum, and their view of their present situation rose to the highest level since September 2008, the heart of the financial crisis.
A separate report on Tuesday showed U.S. home prices were unchanged in January from December, the first time since July prices have not declined in a sign the battered housing market is slowly stabilizing.
A report from industry group The Conference Board showed the index of consumer attitudes slipped to 70.2 from an upwardly revised 71.6 the month before, roughly in line with economists' forecasts for 70.3.
But expectations for inflation in the coming year jumped to the highest level since May 2011 at 6.3 percent from 5.5 percent.
The biggest moving part in that scenario has been gasoline prices. So that's certainly on consumers' radar screen - or dashboard as the case might be, said Carl J. Riccadonna, director and senior U.S. economist of global markets research at Deutsche Bank Securities in New York.
Rising gasoline prices have sparked worries that already fragile consumers could start to feel squeezed, putting a dent in the economy. Prices at the pump reached $3.92 a gallon last week.
At this point, it's enough to certainly slow things down for the consumer, said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
I don't think it's enough to throw us into a recession, but we really haven't seen the full impact yet.
Consumers' expectation for inflation was below the 6.7 percent seen a year ago when similar concerns were taking hold following a massive earthquake in Japan and political turmoil in the Middle East and north Africa.
Federal Reserve Chairman Ben Bernanke on Monday defended the central bank's policy of very low interest rates, making clear the Fed is in no rush to reverse course after responding aggressively to a deep recession.
The Fed's not really concerned with 12-month ahead inflation forecasts, they're really interested in a more long-term inflation outlook, said Brown.
The S&P/Case-Shiller composite index of 20 metropolitan areas was flat in January on a seasonally adjusted basis, beating economists' expectations for a decline of 0.2 percent.
It was the first time the index did not decline since July 2011, when prices were also flat month-over-month. The last time prices increased was April of last year. Average home prices across the country were back to early 2003 levels, the report said.
We expect prices now to be stable, and perhaps even to nudge a bit higher, over the next few months at least, Ian Shepherdson, chief U.S. economist at High Frequency Economics, said.
A sustained recovery in home prices is still a long way off, but stabilization is an essential first step, not least because no-one wants to borrow money to buy a depreciating asset.
Prices have been pressured by a low demand, distressed sales and an overhang of pending foreclosures. The data echoed other recent reports suggesting the housing market is in a fledgling, though weak, recovery.
On a non-seasonally adjusted basis, prices tumbled 0.8 percent in January from December.
Year over year, prices fared a little better with January notching a 3.8 percent decline compared to the year before, in line with expectations and an improvement from December's 4.0 percent drop.
Financial markets saw little reaction to the data as Wall Street stalled near four-year highs.
A separate survey showed U.S. small business confidence rose to its highest level in a year in the first quarter with more firms planning to ramp up hiring as the economy's prospects improved.
Vistage International said its confidence index rose to 105.1 in the first three months of 2012 from 98.8 in the final months of 2011.
(Additional reporting by Ellen Freilich)