Summertime spikes in gasoline prices above $3 a gallon do not eat into consumer confidence to the degree they once did because of expectations that prices will drop after Labour Day, the director of a consumer survey said Friday.
Consumers expect additional increases in gasoline prices before the end in September of the summer driving season, said Richard Curtin, director of the Reuters/University of Michigan Surveys of Consumers.
Consumers then anticipate smaller gains over the next five years, he said in a statement. Perhaps a more critical insight consumers have recently gained is the recognition of seasonal variations in gas prices, as prices rise in the spring, peak in late August and then decline in the fall, Curtin said.
Given that this is the third year US gas prices have topped $3 a gallon (79 US cents a liter), consumers have learned to expect seasonal declines in September. It is this recognition that has lessened the impact of gas prices on trends in consumer confidence, he said.
Gasoline prices, whose slightest budge can immediately be seen on highways, may impact consumer confidence more than justified by their effect on Americans' budgets, Curtin said.
Few other purchases are made as frequently by consumers and even fewer purchases have shown the same variability in price than the purchase of gasoline, he said.
Those changes are highly visible, with the latest daily wiggle in world oil prices promptly posted at corner gas stations, he said. The data indicate that gas prices do have a significant impact on confidence, but not disproportionately, he said.
Gas prices influence inflation expectations, including increases in the cost of a wide range of goods and services. Anticipated changes in gas prices have driven up the expected inflation rate for the year ahead, although not as much as in the 1970s because of energy's declining share in consumer budgets.
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