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On the radar: Slide in gasoline prices comes to an end

The AAA average price for a gallon of regular gasoline leveled out at $2.245 week-over-week on Monday, January 21. It is now down nearly 67 cents a gallon from the near-term peak of $2.914 on October 8. This is a substantial change that has contributed positively to consumer confidence in the past few months and improved consumers’ discretionary income. As long as prices do not to start to rise again by a meaningful amount, this is price at the pump with which consumers are likely to remain comfortable.

Looking back at the Energy Information Administration data — weekly EIA and AAA reports of gasoline prices align closely, but I use EIA numbers for monthly data — gasoline prices often start to rise in January and/or February, but the normal size of the increases — if they occur this year — shouldn’t do more that retrace part of the drop since October.

In any case, a flattening out in prices should mean inflation measures for January will not see the same downward pressure in the energy component that was present in November and December.

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