:max_bytes(150000):strip_icc()/GettyImages-1808129075-96809d6d0e524ac9aa3cda4482154f18.jpg "Will Gas Prices Continue to Drive an Inflation Slowdown?")
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KEY TAKEAWAYS
- Easing gas prices fueled the drop in consumer prices in June, according to new inflation numbers Thursday.
- That could change next month, as average gas prices across the country have risen so far this month.
- High demand and rising crude oil prices threaten to raise costs at the pump.
Travelers got a reprieve at the gas pumps in June, but it may not last for long.
The Consumer Price Index, an indicator of inflation released Thursday by the Bureau of Labor Statistics, dropped 0.1% over the month. Easing gas prices were a major contributor to the drop in overall prices, the report showed.
Average gas costs in June sank from the peak prices of April and May, according to data from AAA. However, so far in July, average prices have started to rise again.
“Turning to July, the CPI will be a little less friendly for both the consumer and the Fed,” wrote Ryan Sweet, Oxford Economics’ Chief US Economist. “Gasoline prices have risen early in July following global oil prices and seasonal demand higher, which will boost the CPI for motor fuels.”
Part of the reason for increasing prices is high demand. As the summer warms up, many travelers are hitting the road for holidays and vacations.
Economists at Bank of America used credit card spending data to estimate that car travel nearly returned to pre-pandemic levels in June. They said leisure-specific drives may have surpassed pre-pandemic levels when considering people are driving less for their jobs because of remote and hybrid work schedules.
Crude oil prices also influence gas prices, and those prices have been on the rise. Over the past month, crude oil prices have increased more than 10%.