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Inflation hits 9.1% over past year, highest in 40 years
Consumer prices soared 9.1% compared with a year earlier, the government said, the biggest yearly increase since 1981, and up from an 8.6% jump in May. On a monthly basis, prices rose 1.3% from May to June, another substantial increase, after prices had jumped 1% from April to May.
The national average price for a gallon of regular gas has dropped below $4 for the first time since early March, according to a GasBuddy analysis.
GasBuddy Head of Petroleum Analysis Patrick De Haan released a YouTube video explaining where he thinks gas prices are heading.
"I do believe, for now at least, that the national average will continue to decline...will probably go down another 10 or 25-cents a gallon over the next couple of weeks," he said.
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However, he cautioned that hurricane season could increase prices again.
Meanwhile, auto club AAA has the national average at $4.01 a gallon. AAA said the record-breaking high gas prices kept many drivers off the road for much of the summer.
Gas prices dropped from $5 a gallon, on average, in mid-June to $4.20 by the end of last month, and were just $4.01 on Wednesday, according to AAA. Oil prices have also fallen, and cheaper gas will likely pull down inflation this month as well, economists said.
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"Oil is the primary ingredient in gasoline, so less expensive oil is helpful in taming pump prices," Andrew Gross, AAA spokesperson, said in a news release. "Couple that with fewer drivers fueling up, and you have a recipe for gas prices to keep easing."
Last month’s declines in travel-related prices helped lower core inflation, a measure that excludes the volatile food and energy categories and provides a clearer picture of underlying price trends. Core prices rose just 0.3% from June, the smallest month-to-month increase since March. Compared with a year ago, core inflation amounted to 5.9% in July, the same year-over-year increase as in June.
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But there’s optimism that inflation may have peaked.
Consumer prices jumped 8.5% in July compared with a year earlier, the government said Wednesday, down from a 9.1% year-over-year increase in June. On a monthly basis, prices were unchanged from June to July, the first time that has happened after 25 months of increases.
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Americans are still absorbing bigger price increases than they have in decades. Grocery prices jumped 1.1% in July and are 13% higher than a year ago, the largest year-over-year increase since 1979. Bread prices leaped 2.8% last month, the most in more than two years. Rental and medical care costs rose, though slightly less than in previous months.
President Joe Biden has pointed to declining gas prices as a sign that his policies — including large releases from the nation’s strategic oil reserve — are helping lessen the higher costs that have hurt household finances, particularly for lower-income Americans and Black and Hispanic households.
The Associated Press contributed to this report. This story was reported from Los Angeles.