American motorists have seen a little relief over the last week or two as pump prices fell from record high levels for this time of the year. As shown below, after exceeding last year’s record high prices for the last five weeks, 2013 prices have now dipped back below those levels and are likely to stay there for at least a little while given the recent drop in crude oil prices and the continuing rise of a year ago.
Nonetheless, there will be a big spike in the energy component of the February inflation report to be released on Friday that will reflect the early-2013 rise. Little noticed a few months ago was that 2012 saw a new record high for average pump prices, all part of the “frog in boiling water” effect that consumer prices have had on the American people as the central bank continues to remind us that inflation is less than two percent a year while average pump prices have increased an average of 10 percent per year since 2004.