The gasoline dragon has been killed. Inflation is creeping back into the cave as consumers are ecstatic.
On Wednesday, the U.S. Bureau of Labor Statistics (BLS) released Most recent monthly consumer price index (CPI). The report tracks the prices of various consumer goods, No net price growth was shown last month.
Meanwhile, inflation fell to 8.5% year-on-year in July After hitting a 40-year peak of 9.1% in June.
The decline was largely due to a slump in natural gas prices, down 7.7% since June, offsetting smaller price increases in other sectors such as food and housing.
The last time inflation made consumers feel optimistic was in May, when the CPI showed that inflation had fallen to 8.3% in April after hitting a high of 8.5% in March. However, in the ensuing summer, record gasoline prices pushed headline inflation figures higher.
July’s decline appears to have been different after other evidence that prices may actually be slowing. on Monday, New York Fed releases survey of consumer expectations, which measures how consumers feel about the economy. This week’s report showed the biggest monthly drop in inflation concerns since the survey began in 2013.
Consumers expect inflation to slow to 6.2% next year from 6.8% in June, the survey showed. The decline has tangible implications, as inflation expectations are seen as tied to economic reality, with businesses raising prices in response to their expectations of near-term economic conditions.
These expectations are likely a direct result of the apparent and steady decline in gasoline prices, which peaked at a national average of $5.02 a gallon in mid-June, According to AAAIt wasn’t until they started falling that those prices soured national economic sentiment, with consumers thinking about inflation every time they needed to refuel their cars.
Today, the average cost of gasoline is $4.01 per gallon. what is the problem?
Gas prices have been a particular sore spot for President Joe Biden over the summer, as his approval ratings dipped as multiple polls show Americans are increasingly negative about the economy.
linked to natural gas prices oil price The issue is largely beyond his direct control due to pandemic-related supply issues and geopolitical disruptions. Still, he tried to control the price.
in June, He wrote a letter to oil company executivescriticized them for making record profits while not adding enough production to meet demand.
“I know a number of factors contributed to my business decision to reduce refinery capacity before I took office,” he wrote“But in times of war, it is unacceptable to pass on much higher than normal refinery margins directly to American households.”
in July, He repeated the same idea on Twitter: “My message to the companies that run gas stations and set their prices is simple: This is a time of war and global danger.”
In addition to these public calls for oil companies to help lower prices, Biden has floated the idea of a three-month national gas tax holiday. Holiday, Analysts say no big price cuts, did not take effect. However, several states, including Maryland, Georgia and Connecticut, created their own bills.
Meanwhile, the White House Coordinated release of federal emergency oil reserves “Resolve severe global supply disruptions caused by Putin’s war with Ukraine and help stabilize volatile energy costs for American households,” According to a statement from the Department of Energy.
However, it is unclear what impact these efforts have had on the sharp drop in gasoline prices in July, and How much is due to the drop in crude oil prices.
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