The CPI rose 3.4% year over year in July and was touted as a slowing of inflation. It is still below a target set long ago by the Fed, which is about 2%. The July figure is viewed as a possible block to the Fed raising rates. However, what is inflation and what is not ends up in the eye of the beholder.
Gas prices rose 24.7%. Fuel oil prices rose 39.1%.
A typical American drives 14,000 miles a year. At $4.07 a gallon of regular, gas prices are up 29% year over year. About 30% of Americans, however, drive over 15,000 miles. In 10 states, they drive over 16,000 miles. In eight, they drive over 17,000 miles. Depending on a vehicle’s MPG, the 29% increase is meaningful.
Gas prices are not a trivial expense. They run about $2,500 per household.
Often more important than gas prices when it comes to inflation is the price of diesel. America runs on diesel to the extent that 70% of all freight based on weight is moved by truck. The average price per gallon is $5.40. That is up 45% year over year, according to AAA.
The Real Economy Blog points out, “We expect higher transportation costs to continue to pressure food and most other goods higher for consumers and for all aspects of the business community.” Over time, does the consumer dodge that effect? Almost certainly not.
Gas prices have already hit consumers, so their effect is obvious. Diesel’s effect in terms of time frame is not so obvious, but some of it will be passed along. Businesses that sit between diesel prices and consumers cannot simply absorb that difference.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks