The July 2022 CPI statistics will be released on August 10 at 8:30 a.m. ET.
What Is Gas Doing? Gasoline was one of the largest contributors to the 9.1% inflation rate in June, the biggest annual increase in over four decades.
According to the CPI data from June, gasoline rose 11.2%, its largest increase since March.
Despite accounting for less than 6% of the CPI, according to the Bureau of Labor Statistics, gasoline prices are more volatile than other CPI components, and they’re frequently the primary driver of monthly price changes in the all-items index.
However, the 52-day streak of falling gas prices is the longest since the early 2020 collapse in energy demand caused by the Covid-19 pandemic. Energy analysts say Americans are now spending $330 million less on fuel each day. Lower fuel costs will undoubtedly affect the all-items index.
Why Gas Price Matters: Shipments of goods, particularly foods, are impacted by the cost of fuel. Fuel costs, notably diesel and jet fuel, both have significant impacts on the bottom line for farmers, and airlines. Diesel now costs $5.16 on average in the U.S., 54 cents less than it did one month ago.
The fall in prices at the pump has followed a slump in global oil prices, which have been dropping over the last month amid growing signs that the world economy is slowing.
Keep an eye on gasoline data in the August 10 CPI report, a drop in gasoline prices will affect the overall data.
Good News Is Bad News: The Labor Department reported encouraging U.S. jobs market numbers this week, adding 528,000 jobs in July, far higher than consensus estimates of 258,000 jobs. The U.S. unemployment rate dropped from 3.6% to 3.5%, returning to its pre-COVID pandemic level.
Here’s Where It Counts: As gasoline prices fall and new data show unexpectedly fast job growth and high overall employment despite high inflation and rising borrowing costs, the Federal Reserve is under increased pressure to announce another 75 basis point interest rate hike at the upcoming FOMC in September.