U.S. Jan-24 CPI report sees a gasoline price slide, but not the surge that follows
February 13, 2024
Key Observations:
BLS will publish the Jan-24 U.S. CPI report today. One of the more important consumer prices in this report will be the regular grade gasoline price.
Given that we can track gasoline prices in real time, we already know that the report must show that U.S. gasoline prices dropped by about 1 percent between Dec-23 and Jan-24. All else equal, this result supports the "beating inflation" argument.
However, all else is not equal. Because we can track retail gasoline prices in real time, we know already that the next U.S. CPI report from BLS, for Feb-24, due on Mar. 12, will probably show at least a +4 percent MoM increase. That's where we're at already with $3.20 per gallon observed at the pump today.
Moreover, not only do the behavior of NYM RBOB gasoline futures endorse that conclusion, they also indicate that U.S. retail prices may exit Feb-24 as much as +7 percent above the Jan-24 exit. Admittedly, even this higher price level would mark a small YoY decline, about –3 cents per gallon.
Source: AAA, Blacklight Research. Note: parenthetical notations in the chart indicate, roughly, the first, second, and third intervals of each month (i.e., about ten days) from November 2023 through February 2024. Interval No. 2 for Feb-24 is based off incomplete, but strong momentum, price data. We have high confidence in this result. Interval No. 3 for Feb-24 is a projection based off the recent behavior of prompt NYM RBOB gasoline futures prices. Admittedly, it's more squishy. If the projection eventuates, then the coming Feb-24 U.S. CPI report will most likely show a reatil gasoline price increase on the order of +4 percent MoM with a month-end to month-end acceleration closer to +7 percent MoM. These factors help explain the positive momentum in share prices of U.S. refiners, including Marathon Petroleum Corp. (MPC, $64 Bn marketcap) and Valero Energy (VLO, $48 Bn marketcap).
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