Gasoline prices in US jump by over 9% since early 2023

US gasoline prices have shot up an unusually strong 9.2% in January to average about $3.50 a gallon, which could throw a wrench in the Federal Reserve’s inflation fight, according to Bespoke Investment Group, Report informs referring to MarketWatch.

Prices at the pump fell sharply in the second half of 2022 to a low of $3.096 a gallon on December 22, giving back all six months of earlier gains, plus some (see chart), according to Bespoke, when looking at the AAA reading of national average gas prices.

Gas prices tend to be seasonal, often rising in the first six months of a year. The Bespoke team also found that double-digit monthly increases haven’t exactly been rare since mid-2004.

Last year gas prices were particularly volatile, jumping to a record above $5 a gallon in June, but falling back to around $3 a gallon in December, a factor credited with helping pull U.S. inflation down from a 9.1% annual peak last summer to 6.5% in December, based on the consumer-price index.

“I think the markets have talked themselves into a position that they are going to lose,” said Kent Engelke, chief economic strategist at Capitol Securities, adding that energy prices the have come down are heading back up, which could keep inflation elevated.