As of Monday, December 27, from EIA through FRED:
source: Energy information management through FRED, accessed on December 28, 2021.
Since the November 8 reading, gasoline prices (all formulas) have now fallen by about 4%.
What is the impact on CPI-all city?Below I show the mechanical decomposition of the direct impact on CPI (using logarithmic approximation, and December 2020 weights). Please note that the fuel cost included in the commodity price is not included.
figure 1: CPI-All cities’ chain-to-month annualized inflation rate (black line), direct contribution from gasoline prices (blue bar), and contributions from all other sources (brown bar), all seasonally adjusted. Rate calculated using logarithmic difference and weight for December 2020. NBER-defined recession dates are shaded gray from peak to trough. Source: BLS, NBER and author’s calculations.
Looking forward to the December data, the share of gasoline prices in total inflation should decline.
As of December 28, gasoline futures prices are at a discount. Chinn and Coibion (2014) Please note that gasoline futures are an unbiased predictor of future gasoline prices within 6 months, and predict random walks (and predict simple ARIMA(1,1,1)).
