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Gas prices in the U.S. are now lower than they were a year ago

U.S. gas prices now lower than 1 year ago
U.S. gas prices now lower than 1 year ago, even as inflation remains high 02:15

The average cost of gasoline in the U.S. has dropped below the price a year ago, the first time that has occurred in 22 months. 

The average price for regular gas stood at $3.33 a gallon on December 8, compared with an average of $3.34 on the same date in 2021, AAA said Thursday. The last time gas dipped below its year-earlier price was on Feb. 4, 2021, when drivers were paying $2.44 a gallon, compared with $2.46 a gallon on the same date in 2020, AAA told CBS News. 

Fuel prices have plunged over the last several weeks amid slowing consumer demand across the globe, providing some relief to Americans walloped this year by the highest inflation in four decades. Price hikes for other consumer staples are also easing, from cars to some food products, which could signal that the Federal Reserve's efforts to tame inflation are bearing fruit. 

"Half the nation's 50 states are now seeing average gas prices BELOW their year ago levels," tweeted Patrick De Haan, head of petroleum analysis at GasBuddy, late Wednesday. "The number will continue to rise."

The average gas price could fall below $3 per gallon later this month, De Haan predicted in a separate tweet.

The milestone comes after gas prices touched another turning point on December 1, when the cost of fuel fell below what Americans were paying for a gallon of gas before Russia invaded Ukraine in February. The war contributed to a sharp spike in gas prices earlier this year, pushing prices at the pump to an all-time high of $5.02 a gallon on June 14.

Meanwhile, there are other signs that prices are cooling, with the Fed's favorite measure of inflation — the Personal Consumption Expenditure (PCE) price index — easing in October.

MoneyWatch: Americans delaying financial milestones 02:33

"Importantly, signs of slowing inflation are proliferating," noted Bob Schwartz, senior economist, in a research note earlier this month. "All the pandemic climb in prices that manufacturers paid for raw materials has been completely reversed and the slowdown appears to be filtering through to the consumer sector."

Still, inflation remains historically high, and consumers are paying much more for gasoline than they did prior to the pandemic. In February 2020, for instance, the average cost for a gallon of gas was $2.44, according to the U.S. Energy Information Administration.

Economists expect that next week's Consumer Price Index report will show November prices rose 7.3% compared with a year ago, according to FactSet. That's down from a peak this year of 9.1% in June, but still higher than the Federal Reserve's inflation goal of about 2%.

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