CHART OF THE DAY: Gas prices have completely reversed, turning lower in 2023 after 18% plunge

Gasoline prices
  • Prices for gas at the pump have turned negative on the year after plunging 18% since September.

  • The average price of a gallon of gas in the US fell to $3.20 this week, compared to $3.90 a few months ago.

  • The sharp decline in gasoline prices comes at a seasonal low period following the busy summer travel season.

Our Chart of the Day is from Bespoke, which shows a sharp decline in the average price of a gallon of gas since September.

According to AAA, gasoline prices have declined by 18% to $3.20 per gallon this week, compared to a 2023 high of $3.90 per gallon just a few months ago.

The sharp decline represents a new 2023 low for the average price of a gallon of gas, and is below the 2022 closing price of about $3.21. The decline comes a few months after the busy summer travel season, in which demand for gasoline typically surges as more people hit the road for vacation.

The drop in gasoline prices has coincided with a drop in the price of crude oil, which fell from $95 a barrel in September to about $70 today, representing a decline of 26%. Oil prices are seeing their longest streak of declines in five years.

According to Bespoke, the sharp drop in gas prices should put downside pressure on inflation.

"In our view, we're likely to see a negative month-over-month print in November headline CPI, mostly due to the steep drop in gas prices," Bespoke said in a note to clients on Thursday.

If a drop in November CPI materializes, as Bespoke expects, it could have a strong influence over the Federal Reserve's interest rate decisions. The market expects the Fed to keep interest rates steady at its FOMC meeting next week, followed by a wave of interest rate cuts throughout 2024.

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