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Gas Prices Dip Below $4 Amid Persistent Inflation
Confirmed
In Short: Inflation-scarred consumers find relief at the gas pump as prices drop below $4, but overall inflation remains stubbornly high.
Daily natural gas spot prices Basis to Henry Hub (24563573581).
National average gas prices drop below $4 for first time in months. WTHR
Inflation-scarred consumers are finding a bit of relief these days at an unlikely place: the gas pump. The price of regular gas has fallen by 38 cents in the last month to a national average of $3.98, according to NPR.
The drop in gasoline prices is thanks to a combination of falling crude oil prices, refineries' switch to a cheaper blend of winter fuel, and the typical seasonal drop in demand for gas.
Consumer prices in October were up 0.4% from the previous month, according to a report Tuesday from the Labor Department. This is a bigger monthly increase than forecasters had expected.
However, broader inflation remains a concern. The Bank of England's Monetary Policy Committee announced on Thursday it has overwhelmingly voted to increase interest rates to 4% from 3.75%, the first time since August 2023 to combat rising prices driven by the war in Iran.
"But, unless the conflict in the Middle East is resolved, neither does it seem likely to be the last increase," the Bank projected inflation would pick up to nearly 5% by the second quarter of 2027, higher than its previous forecast, with greater spillover into wages and other prices.
The Fed’s preferred inflation measure, the Personal Consumption Expenditures price index, rose 0.5% month over month, compared with a 0.3% increase in August.
Some experts are questioning whether the central bank’s monetary policy can effectively address the current causes of the unusually high price hikes consumers are facing.
What this adds
The drop in gas prices offers temporary relief but does not address the underlying issues driving broader inflation.
The Bank of England's decision to raise interest rates reflects ongoing concerns about inflation, despite the recent dip in gas prices.
The economic pressures are intensifying, with mortgage rates in the UK climbing to two-year highs, as major lenders withdraw products priced below 5%.
What's confirmed
- Inflation-scarred consumers are finding a bit of relief these days at an unlikely place: the gas pump. The price of regular gas has fallen by 38 cents in the last month to a national average of $3.98, according to NPR.
- The drop in gasoline prices is thanks to a combination of falling crude oil prices, refineries' switch to a cheaper blend of winter fuel, and the typical seasonal drop in demand for gas.
- Consumer prices in October were up 0.4% from the previous month, according to a report Tuesday from the Labor Department. This is a bigger monthly increase than forecasters had expected.
- However, broader inflation remains a concern. The Bank of England's Monetary Policy Committee announced on Thursday it has overwhelmingly voted to increase interest rates to 4% from 3.75%, the first time since August 2023 to combat rising prices driven by the war in Iran.
- "But, unless the conflict in the Middle East is resolved, neither does it seem likely to be the last increase," the Bank projected inflation would pick up to nearly 5% by the second quarter of 2027, higher than its previous forecast, with greater spillover into wages and other prices.
- The Fed’s preferred inflation measure, the Personal Consumption Expenditures price index, rose 0.5% month over month, compared with a 0.3% increase in August.
- Some experts are questioning whether the central bank’s monetary policy can effectively address the current causes of the unusually high price hikes consumers are facing.
What's still developing
- Ripple is down over 2% on Thursday, extending losses below $1.30 and capped below crucial moving averages.
- It would also mean that Fed Chair Kevin Warsh, long viewed as an inflation hawk, may be willing to risk the ire of President Donald Trump, who is threatening to halt trade with America’s key partners if the Fed doesn’t cut rates.
- The most recent data from the Office for National Statistics showed that RPI inflation was 3.4% in the year to August while the CPI reading was 3.1%.
- The September projections still see headline inflation averaging 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028, while risks remain tilted upward for inflation and downward for growth.
- The Bank of England should raise interest rates on Thursday in order to “protect credibility” and stamp out any risks of inflation spiralling out of control, top economists have said.
- MarketWatch columnist Mark Hulbert explained that there is actually no stable relationship between geopolitical risk and gold prices.
- Compared to the all-time high of nearly $5,600 set in late January, spot gold prices have fallen more than 26% cumulatively, erasing all year-to-date gains.
- Bitcoin price has reclaimed the $80,000 level after briefly falling below it earlier on Thursday, as fresh US economic data showed stronger than expected growth in the third quarter and persistent inflation in September.
- South Africa-focussed investors were little moved by better-than-expected GDP figures published on Tuesday, with analysts saying the below 1% growth was reflective of a subdued economy that continues to face many structural challenges.
- Mortgage rates across the UK have climbed to two-year highs, with major lenders withdrawing products priced below 5% as economic pressures intensify.