Price of Gasoline Up for 24 Straight Days; CPI Up 2.7%

April 19, 2011 06:12

The $4 a gallon price of gasoline will soon prevail all across the country, with many analysts believing it will hit $5 a gallon before the summer.

The Americano

The price of gasoline went up Sunday for the 24th straight day. The price for a regular gallon of gasoline already surpassed $4 in six states and the District of Columbia.

This came two days after the Obama administration announced that the Consumer Price Index (CPI) – the government’s key inflation measure – had risen 2.7% in March, the fastest pace in more than a year.

Meanwhile the so-called core CPI, which measures the prices of all goods in the nation except for food and energy, was up 1.2% from a year earlier. This is supposed to make people feel that inflation is not as bad. Still, even this crazy way of measuring inflation in the nation, was the biggest 12 month jump since December of 2009.

Some economists said the core CPI was good and “tempered inflation fears” for some. But for consumers, those who have to fill up their gas tanks at prices that are going up daily and those who have to do grocery shopping on a regular basis, the pain in their pocket is real.

The $4 a gallon price of gasoline will soon prevail all across the country, with many analysts believing it will hit $5 a gallon before the summer.

“Consumers are increasingly feeling the pinch of rising prices in part because food and gasoline are frequent purchases and price changes are easily detectable,” Jim Baird, chief investment strategist for Plante Moran Financial Advisors told CNN.

In simple terms; gasoline was the major problem for consumers. Prices at the pump jumped 5.6% in March alone and are now 27.5% higher than a year ago. Food prices jumped 0.8% in March – the biggest one-month increase since July of 2008 – leaving food prices 2.9% higher than a year ago.

The outlook for inflation officially is still the same. Overall prices jumped 0.5% in March, but economists, including those at the Federal Reserve, believe the pain will be transitory. This means that the Fed is unlikely to do anything to try and bring down inflation because the core CPI is still in their comfort zone.

Other economists, however, believe that the increasing price of food and gas is leaving less money in the pocket of consumers and that will endanger the still nascent economic recovery.

And they too are beginning to air their concerns.

“Today’s (Friday’s) report provides further evidence that prices across a broad range of goods and services are gradually beginning to rise,” Peter Newland, an economist with Barclays Capital, said in a note to clients Friday, according to CNN. “Looking ahead, we believe that price pressures are gradually building and that the trend in core prices is firming.”

The Americano/Agencies

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