Consumers can thank falling energy prices for lowering inflation in July, but they are still spending far more at the gasoline pump than they did a year ago.
Filling up a silver Honda Accord in Boston Wednesday afternoon, Nash Desai said higher gas prices , coupled with a desire to cut his fossil-fuel usage, have encouraged him to walk when he can. The 81-year-old retired architect said he has started walking to nearby stores instead of driving.
“Overall, the number is the number,” Desai said, nodding toward a digital pump sign that advertised regular gasoline at $4.49 a gallon in cash. “You have to adjust.”
July’s consumer price index released Wednesday morning found that gasoline and energy prices began to cool last month. The index’s energy category declined 4.6% in July, as gasoline prices dropped 7.7%.
Last month’s gas and energy dip was enough to lower the increase in prices for all items to 8.5% from 9.1% in June. Still, inflation remains near a 40-year peak, and the gasoline index is up 44% over the last 12 months.
According to AAA, the current national average Thursday for a gallon of regular gas sits at just below $4, with higher prices in the Northeast and on the West Coast. A week ago, that figure was $4.16, while the average price a month ago was $4.68. A year ago, drivers were paying $3.19 per gallon.
Infrastructure Capital Advisors chief executive Jay Hatfield said a lag between wholesale and retail gasoline prices implies further reduction in prices at the pump. He thinks pump prices should drop another 30 cents per gallon in the coming weeks.
July’s CPI, he added, didn’t capture all of the existing decline either: Pump prices dropped about 13% from early July to Aug. 1, according to AAA’s tracker, while the CPI gasoline index only fell 7.7%.
Prices could fall some more. Gasoline prices generally peak in late summer when people drive more often and decrease in the fall.
At the end of July, Morgan Stanley AlphaWise survey of 2,000 consumers found that relatively few respondents were planning trips after Labor Day as they listed high gas prices and Covid-19 as the main obstacles to travel.
“I’ve been wasting more money now on gas,” Nomar Aquino told Barron’s after filling up on Wednesday in Boston. He limits his gas-station spending to between $20 and $25 each visit, which usually gets him half a tank.
Europe’s energy crisis may keep U.S. gasoline prices from dropping too much. Russia’s energy exports to the continent have fallen, and prices spiked after Russia invaded Ukraine earlier this year.
As a delivery driver for Grubhub, Iskander Guliyev is used to buying gas often, but the 29-year-old said prices in the U.S. didn’t seem so bad as he filled up Wednesday afternoon.
“There is already an increase in prices all over the world,” said Guliyev, who is originally from Azerbaijan and has lived in Boston for two months now. “But [in] America, [it’s] not very noticeable.”