Inflation is expected to increase further in August due to rising gasoline prices. According to economists, the potential for higher inflation comes despite a recent drop in producer prices index readiness, which was attributed to reduced demand for transportation services and the continued pandemic.
Driven by the surge in oil prices, the expected impact of inflation on consumers is already seen in the form of higher gasoline prices. While the US Energy Information Administration reported that at the beginning of August gas prices had declined compared to July, the trend is expected to turn around due to a rebound in oil prices.
According to experts, the increasing cost of crude oil has caused a surge in retail gasoline prices, which are likely to continue rising for the remainder of August. The leading factors for the increase in prices are a combination of high global oil demand and OPEC’s policy to restrict supply, which has resulted in an increase in oil production cost.
The current inflation, caused by higher gasoline prices, is likely to affect consumers in multiple ways. For starters, higher gas prices may put pressure on consumer budgets, as they may have to allocate greater portions of their budget to fuel. Additionally, higher fuel costs could lead to higher inflation in related products such as consumer goods. This, in turn, could affect the prices of products ranging from food to clothing.
In order to address the issue, the US Federal Reserve could potentially step in to address inflation if it becomes too severe. This could come in the form of interest rate cuts, which should have the effect of encouraging more economic activity and driving down prices.
In conclusion, with higher gas prices and a general trend of inflation expected to continue, consumers in the US should prepare for an increase in the cost of living. Despite this, efforts could be taken by the government through monetary policies to address potential inflation if it becomes too severe.
