Average retail gasoline prices, which hit their lowest point in years shortly after the election of US President Barack Obama, have nearly returned to their Bush-era high of $4.12, currently sitting at $3.85 per gallon.
Consumers spent 0.9 percent more money in August than in previous months – but mainly on gasoline, the Commerce Department reported Friday. August saw the biggest one-month increase in overall consumer prices in years, the Labor Department reported. But retail sales rose by only 0.1 percent as Americans cut back on clothing, electronics and general merchandise – and shoveled out more money to fuel their cars.
“Consumers were not willing to spend much at the mall since they are feeling the pump price pinch,” Chris Christopher, an economist at HIS Global Insight, told AnnArbor.com.
“Most of the spending in August was on products that households have to buy, such as gasoline, not items they like to buy, such as new TVs,” Paul Dales, of Capital Economics, a consultancy, told AP. About 80 percent of the increased spending went to gas, and most of the other dollars spent were for items of necessity.
“The American consumer is tired,” Joel Bines, a director at consultancy AlixPartners, told the Wall Street Journal. “Back-to-school shopping was about necessity, replacing a pair of Keds sneakers a child has grown out of, while the next few months and the holidays are far more about discretionary purchases shoppers might do without.”
The Consumer Price Index (CPI) for gasoline rose by 9 percent last month, and gas prices have risen more than 50 cents per gallon in the past two months alone.
The Federal Reserve last week announced a plan to boost economic growth, but oil prices responded by going up more, AP reports. After the Fed’s news, oil prices jumped to more than $100 a barrel on Friday for the first time since May.
The average US family now spends a significantly higher amount of money on gas than in recent years. A typical family lets 8.2 percent of its income go at the gas pump, spending about $342 to fuel its cars every year. Before 2004, households spent less than $200 per month – less than 5 percent of an American family’s median income.
“Our expenditure is very much based upon necessity,” a Wisconsin couple, whose gasoline expenses jumped 30 percent this month, told the Journal.