Decline in US petrol prices, signals hope for drivers

The fall in US petrol prices are bolstering a positive wind, signalling that the worst wave of inflation in decades could be fading.

The average cost of a gallon of regular gasoline could fall below $3 in the coming days, below the record highs above $5/g struck in the early 2022 period, during which rising costs of rent, and household items were reducing household budgets.

In a nation big on vehicles, drivers are witnessing a breath of relief.

“Oh my God, it was terrible,” said Danis, an Uber driver from Paterson, New Jersey, as he began his shift on Monday night. “It cost like $80 or more to fill my tank. Now, it costs $40-$42.” Fair or not, many Americans judge their economy’s health, and a president’s performance by the petrol price numbers that flash along streets and highways up and down the country, as per The Financial Times report.

“Gas prices are always displayed very prominently. And when you actually go and fill up, you’re standing there watching the number on the ticker rise,” said Claudia Sahm, a former Federal Reserve economist and Founder of Sahm Consulting, in the report.  

While gasoline’s weighting in the CPI basket is just over 3 per cent, economists believe it plays an outsized role, alongside food, in shaping expectations of future price changes, it mentioned.

A similar effect on petrol prices could occur, as the latest PCE data, out on Friday, shows energy goods and services falling 2.7 per cent during November, causing a fall in headline prices by 0.1 per cent.