How Will Falling Gas Prices Impact Gas Station Sales?
In any economy, the cost of fuel plays an important part in retail sales (XRT) and inflation (TIP). A higher cost of fuel will inflate sales at gas stations, and it will also have a positive impact on inflation. The retail sales that are used to estimate the health of the economy include gas station sales. Fluctuations in crude prices in recent months affected gas station sales this quarter, and the volatility is expected to continue in the near term.
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Falling crude prices and inflation
Global crude oil prices have been falling since the beginning of 2017, and crude oil prices have fallen 4.7% in June and 2.1% in May. The gasoline service station (TA) component of retail sales is highly influenced by the gasoline price, which in turn is a direct derivative of international crude prices (USO). The gasoline component of consumer price inflation is likely to drop more than 4% this June, following the 6.4% drop in May and a 1.2% gain in April.
June gas station retail sales are likely to drop
The gasoline station retail sales component could drop in June, reflecting the price drop in global crude prices. This will be the second month of falling sales after a 2.4% decline in the previous month.
In the next part of this series, we’ll discuss how the fall in vehicle sales (CARZ) in June could affect retail sales data.