Gas prices are skyrocketing and are expected to rise even higher this summer

Grace Kay
·2 min read
gas station
A man fills up a car at a filling station. Alexander Ryumin\TASS via Getty Images
  • Gas prices climbed over 9% in the past month and 22.5% from last year.

  • Fuel prices are expected to reach a three-year high this summer.

  • As vaccination rates increase, the costs of goods will continue to rise.

  • See more stories on Insider's business page.

Gas prices jumped over 9% in the past month and they're not expected to slow down anytime soon.

Gas prices are up 22.5% from the previous year and were the biggest contributor to an overall increase in goods and services in the nation, according to the US Bureau of Labor Statistics' Consumer Price Index. Fuel prices pushed a 1-month increase in the overall price of goods for March that was the highest in nearly 9 years.

A recent government report shows gas prices are expected to climb to a three-year high this summer. Prices at the pump will average $2.78 per gallon - up 34% from 2020 - in the next six months, according to the Energy Information Administration (EIA).

Steve Nalley, EIA Acting Administrator, said the group's outlook on summer prices is largely tied to rising vaccination rates.

"We forecast 15% more highway travel this summer as a result of rising employment, easing regional restrictions designed to slow the pandemic, and increasing overall economic activity as vaccination rates increase," Nalley said in a statement.

Rising demand for gasoline piles onto a host of other supply constraints for fuel in the US. From shipping container shortages and the impact of the Suez Canal blockage, to OPEC production cuts, fuel is only getting more valuable.

Analysts also said the rise in prices are showing signs of inflation in the US.

The report "is the clearest indication so far that the signs of mounting inflation evident in business surveys and producer prices are feeding through to stronger consumer prices," Michael Pearce, senior U.S. economist at Capital Economics, said in a statement to CNBC. "For all the focus on supply disruptions pushing goods prices higher, the strongest upward pressure on prices is coming from the services sector."

Outside of gasoline price increases, which accounted for about half of the overall CPI increase, the cost of food, rental cars, and hotels also pushed higher.

Prices increased over last year at their highest rate since 2018, beating analysts estimates. The index rose 0.6%, while analysts estimated a 0.5% increase, according to Dow Jones estimates.

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