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    Inflation Soared in June, Pinching Consumers and Challenging Policymakers

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    Prices surged 9.1 percent in June as consumers faced rapidly rising costs for gas, food and rent, a higher-than-expected reading and bad news for Americans at a moment when their wages are falling further behind the nation’s soaring cost of living.The fresh Consumer Price Index report released on Wednesday contained particularly worrying signs for the Federal Reserve, providing evidence that price pressures are broad and stubborn in ways that may make them difficult to wrestle under control.Overall, inflation is likely to moderate in July because gas prices have fallen this month — a gallon of regular gas hit an average of about $5 in June, and the cost is now hovering around $4.63. But fuel prices are volatile, making it impossible to know if today’s lower gas prices will last, and the report suggested that underlying inflation pressures remained intense.In particular, a core inflation index that strips out food and fuel prices to give a sense of the broad trend remained surprisingly high. That measure climbed 5.9 percent over the year through June, barely a slowdown from last month’s 6 percent increase. Core prices also jumped 0.7 percent from May to June, more than the previous monthly increase.Persistent price gains portend trouble for President Biden, whose approval ratings have taken a hit amid climbing costs, and could require continued forceful action from the Fed. The central bank is raising rates to slow the economy and to try to restrain inflation, and it is likely to continue adjusting policy quickly — even if doing so risks tipping the economy into a recession — as inflation looks increasingly out of control.“It’s an ugly report,” said Julia Coronado, the founder of MacroPolicy Perspectives. “I don’t think there is anything good about this report, as far as the Fed is concerned, as far as the U.S. consumer is concerned.”The global economy has been buffeted by a series of shocks that have pushed inflation higher since the outset of the pandemic. Factory shutdowns and shipping shortages have roiled supply chains, and worker shortages are making it harder for airlines to fly at capacity and for hotels to rent out rooms. Russia’s invasion of Ukraine has disrupted gas and food supplies.President Biden has acknowledged the pain that inflation is causing, calling it “unacceptably high” in a statement on Wednesday. Erin Schaff/The New York TimesWhile economic policymakers initially hoped that the disruptions would fade and that prices would ease on their own, they have stopped waiting for that to happen — especially as price increases prove not only pronounced but also widespread, rising rapidly across an array of goods and services.The Fed has been raising interest rates since March in an effort to slow consumer and business demand, hoping to cool the economy and bring inflation back down. The central bank has sped up those rate moves as price increases have proved surprisingly stubborn, and the new inflation report spurred speculation that the Fed might turn even more aggressive.8 Signs That the Economy Is Losing SteamCard 1 of 9Worrying outlook. More

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    Biden Seeks Price Cap on Russian Oil Amid Fears of Gas Shock

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    Negotiating and selling the plan is a crucial task facing Treasury Secretary Janet L. Yellen as she travels to Asia in hopes of averting $7 a gallon gasoline.WASHINGTON — Relief at the gas pump coupled with this past week’s news that businesses continue to hire at a blistering clip have tempered many economists’ fears that America is heading into a downturn.But while President Biden’s top aides are celebrating those economic developments, they are also worried the economy could be in for another serious shock later this year, one that could send the country into a debilitating recession.White House officials fear a new round of European penalties aimed at curbing the flow of Russian oil by year-end could send energy prices soaring anew, slamming already beleaguered consumers and plunging the United States and other economies into a severe contraction. That chain of events could exacerbate what is already a severe food crisis plaguing countries across the world.To prevent that outcome, U.S. officials have latched on to a never-before-tried plan aimed at depressing global oil prices — one that would complement European sanctions and allow critical flows of Russian crude onto global markets to continue but at a steeply discounted price.Europe, which continues to guzzle more than two million barrels of Russian oil each day, is set to enact a ban on those imports at the end of the year, along with other steps meant to complicate Russia’s efforts to export fuel globally. While Mr. Biden pushed Europe to cut off Russian oil as punishment for its invasion of Ukraine, some forecasters, along with top economic aides to the president, now fear that such policies could result in huge quantities of Russian oil — which accounts for just under a tenth of the world’s supply — suddenly taken off the global market.Analysts have calculated that such a depletion in supply could send oil prices soaring to $200 per barrel or more, translating to Americans paying $7 a gallon for gasoline. Global growth could slam into reverse as consumers and businesses pull back spending in response to higher fuel prices and as central banks, which are already raising interest rates in an effort to tame inflation, are forced to make borrowing costs even more expensive.The potential for another oil shock to puncture the global economy, and perhaps Mr. Biden’s re-election prospects, has driven the administration’s attempts to persuade government and business leaders around the world to sign on to a global price cap on Russian oil.It is a novel and untested effort to force Russia to sell its oil to the world at a steep discount. Administration officials and Mr. Biden say the goal is twofold: to starve Moscow’s oil-rich war machine of funding and to relieve pressure on energy consumers around the world who are facing rising fuel prices.To transport its oil to market, Russia draws on financing, ships and, crucially, insurance from Britain, Europe and the United States. The European penalties, as currently constructed, would not only cut Russia off from most of the European oil market but also from those other Western supports for its shipments. If strictly enforced, those measures could leave Moscow with no means of transporting its oil, at least temporarily.The Biden administration’s proposal would not affect the European ban, but it would ease some of the other restrictions — but only if the transported Russian oil is sold for no more than a price set by the United States and its allies. That would allow Moscow to continue moving oil to the rest of the world. The oil now flowing to France or Germany would go elsewhere — Central America, Africa or even China and India — and Russia would have to sell it at a discount.8 Signs That the Economy Is Losing SteamCard 1 of 9Worrying outlook. More

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    Gas Prices Around the World Threaten Livelihoods and Stability

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    “NO ES SUFICIENTE” — It’s not enough. That was the message protest leaders in Ecuador delivered to the country’s president this past week after he said he would lower the price of both regular gas and diesel by 10 cents in response to riotous demonstrations over soaring fuel and food prices.The fury and fear over energy prices that have exploded in Ecuador are playing out the world over. In the United States, average gasoline prices, which have jumped to $5 per gallon, are burdening consumers and forcing an excruciating political calculus on President Biden ahead of the midterm congressional elections this fall.But in many places, the leap in fuel costs has been much more dramatic, and the ensuing misery much more acute.Families worry how to keep the lights on, fill the car’s gas tank, heat their homes and cook their food. Businesses grapple with rising transit and operating costs and with demands for wage increases from their workers.In Nigeria, stylists use the light of their cellphones to cut hair because they can’t find affordable fuel for the gasoline-powered generator. In Britain, it costs $125 to fill the tank of an average family-size car. Hungary is prohibiting motorists from buying more than 50 liters of gas a day at most service stations. Last Tuesday, police in Ghana fired tear gas and rubber bullets at demonstrators protesting against the economic hardship caused by gas price increases, inflation and a new tax on electronic payments.Discontent over soaring fuel prices prompted angry demonstrations in Quito, Ecuador.Martin Bernetti/Agence France-Presse — Getty ImagesThe staggering increase in the price of fuel has the potential to rewire economic, political and social relations around the world. High energy costs have a cascading effect, feeding inflation, compelling central banks to raise interest rates, crimping economic growth and hampering efforts to combat ruinous climate change.The invasion of Ukraine by Russia, the largest exporter of oil and gas to global markets, and the retaliatory sanctions that followed have caused gas and oil prices to gallop with an astounding ferocity. The unfolding calamity comes on top of two years of upheaval caused by the Covid-19 pandemic, off-and-on shutdowns and supply chain snarls.The spike in energy prices was a major reason the World Bank revised its economic forecast last month, estimating that global growth will slow even more than expected, to 2.9 percent this year, roughly half of what it was in 2021. The bank’s president, David Malpass, warned that “for many countries, recession will be hard to avoid.”In Europe, an over-dependence on Russian oil and natural gas has made the continent particularly vulnerable to high prices and shortages. In recent weeks, Russia has been ratcheting down gas deliveries to several European countries.Across the continent, countries are preparing blueprints for emergency rationing that involve caps on sales, reduced speed limits and lowered thermostats.As is usually the case with crises, the poorest and most vulnerable will feel the harshest effects. The International Energy Agency warned last month that higher energy prices have meant an additional 90 million people in Asia and Africa do not have access to electricity.Expensive energy radiates pain, contributing to high food prices, lowering standards of living and exposing millions to hunger. Steeper transportation costs increase the price of every item that is trucked, shipped or flown — whether it’s a shoe, cellphone, soccer ball or prescription drug.Understand Inflation and How It Impacts YouInflation 101: What’s driving inflation in the United States? What can slow the rapid price gains? Here’s what to know.Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.Greedflation: Some experts say that big corporations are supercharging inflation by jacking up prices. We take a closer look at the issue. Changing Behaviors: From driving fewer miles to downgrading vacations, Americans are making changes to their spending because of inflation. Here’s how five households are coping.“The simultaneous rise in energy and food prices is a double punch in the gut for the poor in practically every country,” said Eswar Prasad, an economist at Cornell University, “and could have devastating consequences in some corners of the world if it persists for an extended period.”In many places, livelihoods are already being upended.Dione Dayola, who drives a commuter jeepney in metropolitan Manila, said spiraling fuel casts had cut his daily earnings to $4 from $15. “How do you expect to live on that?” he said.Jes Aznar for The New York TimesThe livelihoods of many jeepney drivers in Manila have been wiped out.Jes Aznar for The New York TimesDione Dayola, 49, leads a consortium of about 100 drivers who cruise metropolitan Manila picking up passengers in the minibuses known as jeepneys. Now, only 32 of those drivers are on the road. The rest have left to search for other jobs or have turned to begging.Before pump prices started rising, Mr. Dayola said, he would bring home about $15 a day. Now, it’s down to $4. “How do you expect to live on that?” he said.To augment the family income, Mr. Dayola’s wife, Marichu, sells food and other items on the streets, he said, while his two sons sometimes wake at dawn and spend about 15 hours a day in their jeepneys, hoping to earn more than they spend.The incomes of Manila’s jeepney drivers have been diminished.Jes Aznar for The New York TimesSome jeepney drivers in the Philippines have taken to asking neighbors for donations.Jes Aznar for The New York TimesThe Philippines buys only a minuscule amount of oil from Russia. But the reality is that it doesn’t really matter whom you buy your oil from — the price is set on the global market. Everyone is bidding against everyone else, and no country is insulated, including the United States, the world’s second largest oil producer after Saudi Arabia.Persistently expensive energy is stirring up political discontent not only in places where the war in Ukraine feels remote or irrelevant but also in countries that are leading the opposition to Russia’s invasion.Last month, Mr. Biden proposed suspending the tiny federal gas tax to reduce the sting of $5-a-gallon gas. And Mr. Biden and other leaders of the Group of 7 this past week discussed a price cap on exported Russian oil, a move that is intended to ease the burden of painful inflation on consumers and reduce the export revenue that President Vladimir V. Putin is using to wage war.Price increases are everywhere. In Laos, gas is now more than $7 per gallon, according to GlobalPetrolPrices.com; in New Zealand, it’s more than $8; in Denmark, it’s more than $9; and in Hong Kong, it’s more than $10 for every gallon.Leaders of three French energy companies have called for an “immediate, collective and massive” effort to reduce the country’s energy consumption, saying that the combination of shortages and spiking prices could threaten “social cohesion” next winter.Mexico is using money it makes from the crude oil it produces to subsidize gas prices.Celia Talbot Tobin for The New York TimesIn poorer countries, the threat is more fraught as governments are torn between offering additional public assistance, which requires taking on burdensome debt, and facing serious unrest.In Ecuador, government gas subsidies were instituted in the 1970s, and every time officials have tried to repeal them there’s been a violent backlash.The government spends roughly $3 billion a year to freeze the price of regular gas at $2.55 and the price of diesel at $1.90 per gallon.On June 26, President Guillermo Lasso proposed shaving 10 cents off each of those prices, but the powerful Ecuadorean Confederation of Indigenous Nationalities, which has led two weeks of protests, rejected the plan and demanded reductions of 40 and 45 cents. On Thursday, the government agreed to cut each price by 15 cents, and the protests subsided.“We are poor, and we can’t pay for college,” said María Yanmitaxi, 40, who traveled from a village near the Cotopaxi volcano to the capital of Quito, where the Central State University is being used to shelter hundreds of protesters. “Tractors need fuel,” she said. “Peasants need to get paid.”The gas subsidies, which amount to nearly 2 percent of the country’s gross national product, are starving other sectors of the economy, according to Andrés Albuja, an economic analyst. Health and education spending was recently reduced by $1.8 billion to secure the country’s large debt payments.Businesses in Mexico City have struggled with natural gas prices, which have soared even as the government has used subsidies to defray gasoline increases.Celia Talbot Tobin for The New York TimesMexico’s president, Andrés Manuel López Obrador, is using money the country makes from the crude oil it produces to help subsidize domestic gas prices. But analysts warn that the revenue the government earns from oil can’t make up for the money it is losing by temporarily scrapping taxes on gas and by providing an additional subsidy to companies that operate gas stations.In Nigeria, where public education and health care are in dire condition and the state cannot ensure its citizens electricity or basic safety, many people feel that the fuel subsidy is the one thing the government does for them.Kola Salami, who owns the Valentino Unisex Salon in the outskirts of Lagos, has had to hunt for affordable fuel for the gas generator he needs to run his business. “If they stop subsidizing it,” he said, I don’t think we can even. …” His voice trailed off.Kola Salami owns the Valentino Unisex Salon in Lagos, Nigeria.Tom Saater for The New York TimesMr. Salami refills petrol in a generator to power his salon.Tom Saater for The New York TimesIn South Africa, one of the world’s most economically unequal countries, the rising price of fuel has created one more fault line.As President Cyril Ramaphosa campaigns for re-election at the ruling African National Congress’s conference in December, even the party’s traditional allies have seized on the cost of fuel as a failure of political leadership.In June, after fuel reached beyond $6 a gallon, a record high, the Congress of South African Trade Unions marched through Durban, a city already wrecked by violence and looting last year, and floods this year. Higher fuel prices have been “devastating,” Sizwe Pamla, a spokesman for the trade unions, said.A town near Durban, South Africa, which was hit by devastating floods this year, drew protests when fuel prices spiked.Rajesh Jantilal/Agence France-Presse — Getty ImagesThe dizzying spiral in gas and oil prices has spurred more investment in renewable energy sources like wind, solar and low-emission hydrogen. But if clean energy is getting an investment boost, so are fossil fuels.Last month, Premier Li Keqiang of China called for increased coal production to avoid power outages during a blistering heat wave in the northern and central parts of the country and a subsequent rise in demand for air conditioning.Meanwhile, in Germany, coal plants that were slated for retirement are being refired to divert gas into storage supplies for the winter.There is little relief in sight. “We will still see high and volatile energy prices in the years to come,” said Fatih Birol, the executive director of the International Energy Agency.At this point, the only scenario in which fuel prices go down, Mr. Birol said, is a worldwide recession.Reporting was contributed by More

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    Gas Prices Force Many to Rethink Driving, and Spending

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    As summer trips beckon, some are traveling less, at least by car. And those candy bars at the convenience store may find fewer takers.KATY, Texas — Most Americans would gladly pay the $4.29 for a gallon of regular gas Buc-ee’s was charging this week on Interstate 10 between Houston and San Antonio, more than 50 cents below the national average.But with prices more than $1.50 a gallon higher than they were a year ago, even Texans are complaining, and changing their buying habits to make do.“It makes me so stressed out just thinking about buying gas,” said Nancy Oncken, a retired kindergarten teacher, as she filled up her station wagon on her way to join five cousins at a water park outside San Antonio for the long weekend. “It’s now always in the back of my mind to be conservative about what I buy.”When Ms. Oncken drives through Buc-ee’s, the well-known Texas-scale convenience store with enough gasoline pumps to fuel an army, she often buys a souvenir bumper sticker, tumbler or key chain adorned with the cartoonish bucktoothed beaver wearing a baseball cap. But this year, she said, she will keep a grip on her wallet.Drivers will get a bit of a break this Fourth of July weekend now that gasoline prices have eased about 15 cents a gallon over the last two weeks. But with the Russian invasion of Ukraine settling into a grinding war of attrition, constraining global energy supplies, gas prices are not likely to decline much more this summer.At $4.86 a gallon on Thursday, the national average price for regular gas was $1.67 above a year ago, according to the AAA motor club. The fuel prices are altering buying patterns, and there are early signs that people may be rethinking their driving.Economists report that travel spending remains strong this year because of pent-up demand after two years of the Covid-19 pandemic. But interviews with drivers at Buc-ee’s in Katy, Texas, suggest that consumer confidence is beginning to erode under the pressure of high prices for fuel, food and housing. Ms. Oncken and several others said the holiday weekend might be the only vacation they would take this summer, a sharp break from the past.A recent report by Mastercard SpendingPulse, which monitors national retail sales, showed that despite a roughly 60 percent increase in gasoline prices from last year, total spending at gas station convenience stores was up only 29 percent, suggesting that many like Ms. Oncken are compensating for gas prices by saving on little, whimsical indulgences.“Opting for a lower fuel grade, driving a bit less or skipping that slushy or candy bar in the store are part of a bigger picture of choices consumers are making every day in the face of higher prices,” said Michelle Meyer, U.S. chief economist at the Mastercard Economics Institute.The shock is particularly acute given that people grew accustomed to low gasoline prices during the pandemic, when oil prices collapsed from the decline in commuting and other economic activity.Understand Inflation and How It Impacts YouInflation 101: What’s driving inflation in the United States? What can slow the rapid price gains? Here’s what to know.Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.Greedflation: Some experts say that big corporations are supercharging inflation by jacking up prices. We take a closer look at the issue. Changing Behaviors: From driving fewer miles to downgrading vacations, Americans are making changes to their spending because of inflation. Here’s how five households are coping.It will take several months, at least, to sort out all the effects of higher prices on consumer behavior. People are spending more at restaurants than a year ago, and sales of luxury goods remain high, according to Mastercard. But hotel industry executives say many who drive on vacation are choosing destinations closer to home to save on gas.That may be one reason for the modest drop in gasoline prices in recent weeks. Recent Energy Department data suggested that the volume of gasoline sold nationwide had dropped 2 percent or more from a year earlier. And auto dealers in Houston said customer interest in more fuel-efficient cars, as well as electric and hybrid vehicles, was growing, although shortages of parts have limited the supplies of new models.Some transportation and energy experts say the demand for gas has declined partly because more people are flying rather than driving on vacations this year than last, although rising ticket prices and airport delays may reverse that trend as the summer progresses. In some cities, more people are returning to mass transit as concerns over Covid ease.Inflation and a slowing in some areas of the economy may mean some businesses are cutting back on shipping or shortening their supply chains when possible to save fuel.Energy Department data suggested that gasoline sales had dropped 2 percent over the last year.Scott McIntyre for The New York TimesGiovanni Circella, a transportation expert at the University of California, Davis, said that over the years, short periods of high gas prices had not fundamentally changed driving habits since people still needed to commute to work and carry on daily chores like shopping and driving their children to school and activities.“But what will change is if the gas prices stay high for an extended period of time, Americans will start changing the type of cars they drive,” he said.A report released this week by RBC Capital Markets found that over the last 30 years, retail gasoline prices in the United States increased more than 30 percent year over year during 39 individual months. Of those months, demand fell 2 percent or more from the previous year only 12 times. “In short, protracted demand destruction events have historically been rare,” the RBC report concluded.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Hacking High Gas Prices: How People Are Changing Their Habits

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    From changing their work hours to driving farther in search of cheaper deals, people have been making crafty calculations to grapple with expensive gasoline.“I SOLD MY GIRLFRIENDS CAR CAUSE GAS PRICES ARE HIGH 😳” reads the caption on the video Justice Alexander posted online this spring. In the clip, Mr. Alexander, a content creator in Los Angeles, sits atop a horse and declares that he will now travel on horseback.The video, which has been viewed nearly 10 million times so far on TikTok, struck a nerve. While Mr. Alexander later said in an interview that it was a stunt — an Instagram follower lent him the horse, and his household still drives — the sight of him in stirrups, staring defiantly off into the distance captured a once-in-a-generation moment of angst. Gas prices are at record highs. Even when adjusting for inflation, they are on average at levels rarely seen in the last half century.Beyond posting absurd public displays of frustration, many Americans are now grasping for ways to save money by changing work hours or by weighing the algebraic trade-offs of driving farther to find a cheaper pump.Some recognize they have little option to avoid paying more, especially when commuting is a matter of keeping a job or not, but others have been learning to make new trade-offs and crafty calculations. “It’s all about doing the math,” said Ava Patterson, a 25-year-old waitress at a seafood restaurant in East Peoria, Ill.When she notices her tank running low, Ms. Patterson gets out her phone and starts strategizing. Before she leaves her home about 30 minutes away from work, she checks GasBuddy, an app that shows prices at nearby stations. She then calculates what the total price at a given station will be to fill her tank when she stacks one of her three gas rewards accounts on top of the listed price. Ms. Patterson also stops at pumps in small farming towns on her route, where gas tends to be a bit cheaper, she said, and reports rates to GasBuddy to earn points to be entered in a raffle for free fuel.All told, these workarounds can save her up to $2.30 per tank. These days, it generally costs her about $80 to completely fill her 2017 Hyundai Sonata.Ms. Patterson has recently been trying hard to cut down on driving. She does not attend practices for her recreational softball league about an hour away. She has also been rethinking her work schedule. “I started doing more doubles because I want to make sure that it’s worthwhile to drive the distance to work,” Ms. Patterson said. “I’m a waitress, so the money that I make fluctuates,” she added. “It’s made me hesitate on when I want to leave the house.”According to a survey from AAA conducted earlier this year, 75 percent of American adults said they would start changing their lifestyles and habits when gas hit $5 a gallon.Eddie Perez, who owns Scottsdale Party Bus and Limo in Arizona, has been forced to raise rates, and he advises his drivers to stop idling whenever possible.Caitlin O’Hara for The New York TimesAndy Gross, a spokesman for AAA, said demand for gas dipped the week of June 18 for the first time in three weeks, possibly because of increased prices. Those who didn’t drive much before, for environmental or lifestyle reasons, are cutting back further.But for the most part, people are still driving as much as they had been before. For some, that has meant, paradoxically, driving more to find cheaper places to fill up — even if it’s a matter of only saving a few dollars.Tawaine Hall, 36, a network engineer in Fort Worth, said he has driven 45 minutes from his home to take advantage of gas prices that were around a dollar less than those near where he lives. He said he also buys Walmart gift cards, which provide a discount at Walmart gas stations.Jordan Rowe, 27, has driven 25 minutes out of his way to go to a station that accepts the Exxon Mobil rewards app so he can earn points toward future purchases. An assistant general manager at a McDonald’s near Richmond, Va., he commutes about 45 minutes each day to get to work. He has started giving friends rides to work, as well.In some cases, the high costs have given rise to car-pooling and other shared commuting options around the country.Jennifer Gebhard, the executive director of Central Indiana Regional Transportation Authority, said that during the pandemic, her team operated a fleet of 10 vans. Now, there are 30.“Especially in the Midwest, we’re a very drive-by-yourself community,” she said. But many local employers have reached out to her office about setting up van pools for their staffs in recent months. Passengers split the cost.“A hack I would love to have is car-pooling,” said Alexa Lopez. But she has not found a viable options near where she lives in Kissimmee, Fla. She has a long commute: 51 miles each day from her home to her job at a plumbing supply company in Melbourne. So to save money on gas, she has cut down on extracurricular driving, as well as some more essential activities.Ms. Lopez, 30, used to make trips to the grocery store without thinking twice. Now, because of inflation and the high prices of getting herself to the store, she goes only every two weeks. Previously, she said, she would buy “anything and everything,” including snacks like chips for her son. But, she said, “I can’t really buy too much of those any more.”She added, “I’m feeling like pretty much the average American right now: struggling.”For the first time in years, some who had been doing relatively well are facing hard trade-offs. As the war in Ukraine and the pandemic continue to roil the economy, concerns are growing that the U.S. economy may be on the brink of a recession. People are moving to ease their commutes. Family visits are being minimized. Future savings are being funneled toward ballooning grocery prices. It has been a hard jolt.Elizabeth Hjelvik, 26, a graduate student in materials science at the University of Colorado at Boulder, watches her budget closely. She recently started riding her bike to campus. She has also started working from home more often, using her parents’ Kroger fuel points to fill up the tank of her 2005 Honda and cutting back on spontaneous weekend trips.Ms. Hjelvik recalled saying, as she and her partner were recently driving back from a trip to Fort Collins, Colo., about 50 miles away, “This drive is so beautiful, but it might be something we can’t do in the future.” Her family lives in New Mexico, within driving distance of Boulder. “Ideally we would be able to go see them more often, but it’s a lot of gas,” she said.Kaitlyn Thomas, 25, a medical resident living in Horseheads, N.Y., said she sometimes Googles gas prices in nearby Pennsylvania. She also has a running note on her phone where she tracks what’s advertised at the stations she passes on her commute. Next week, she is moving to Sayre, Penn., in order to live within walking distance of work.Laura Romine, 22, took the balancing act one step further: She moved into her van two years ago in order to save money and travel. “Now it’s really not saving that much money,” she said. She keeps her van parked more and avoids traveling around.Gas prices have started to inch down across the United States in the last week, AAA data shows. As of Friday, the average was $4.93 a gallon, compared with $5 a week ago. But economists and industry analysts predict that prices will stay high in the near term, especially as the summer travel season continues and the global energy market remains uncertain. High prices are reaching every corner of the American consumer economy, and fuel costs are having a similar effect.Diesel, which fuels many commercial buses, vans and trucks, has risen similarly this year. That has forced companies to rethink how they conduct their businesses.Near Scottsdale, Ariz., where Eddie Perez owns a party bus company, it’s common to have vehicles idling while customers are at bars or dinner, partly to keep them cool during blazing hot months. He has told his drivers to turn off the buses when possible, and he has raised his prices.George Jacobs, the chief executive of Windy City Limousine and Bus Worldwide in Chicago, said that rising diesel price have “just decimated us.” To try to save fuel, his team has closely monitored software that shows if any of his buses are idling and that flags whether the buses are traveling at the most efficient speeds.He is exploring the idea of adding electric buses to his fleet, as well as other ways to make his operation more efficient. In the meantime, he said that his drivers try to purchase gas out of state, like in Indiana, when they are on the road.“Any time we can fuel up outside of Cook County we do that,” he said. “It’s very serious money.” More

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    Fed Confronts a ‘New World’ of Inflation

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    Central banks had a longstanding playbook for how inflation worked. In the postpandemic era, all bets are off.Federal Reserve officials are questioning whether their longstanding assumptions about inflation still apply as price gains remain stubbornly and surprisingly rapid — a bout of economic soul-searching that could have big implications for the American economy.For years, Fed policymakers had a playbook for handling inflation surprises: They mostly ignored disruptions to the supply of goods and services when setting monetary policy, assuming they would work themselves out. The Fed guides the economy by adjusting interest rates, which influence demand, so keeping consumption and business activity chugging along at an even keel was the primary focus.But after the global economy has been rocked for two years by nonstop supply crises — from shipping snarls to the war in Ukraine — central bankers have stopped waiting for normality to return. They have been raising interest rates aggressively to slow down consumer and business spending and cool the economy. And they are reassessing how inflation might evolve in a world where it seems that the problems may just keep coming.If the Fed determines that shocks are unlikely to ease — or will take so long that they leave inflation elevated for years — the result could be an even more aggressive series of rate increases as policymakers try to quash demand into balance with a more limited supply of goods and services. That painful process would ramp up the risk of a recession that would cost jobs and shutter businesses.“The disinflationary forces of the last quarter-century have been replaced, at least temporarily, by a whole different set of forces,” Jerome H. Powell, the Fed chair, said during Senate testimony on Wednesday. “The real question is: How long will this new set of forces be sustained? We can’t know that. But in the meantime, our job is to find maximum employment and price stability in this new economy.”When prices began to pick up rapidly in early 2021, top Fed policymakers joined many outside economists in predicting that the change would be “transitory.” Inflation had been slow in America for most of the 21st century, weighed down by long-running trends like the aging of the population and globalization. It seemed that one-off pandemic shocks, especially a used-car shortage and ocean shipping issues, should fade with time and allow that trend to return.But by late last year, central bankers were beginning to rethink their initial call. Supply chain problems were becoming worse, not better. Instead of fading, price increases had accelerated and broadened beyond a few pandemic-affected categories. Economists have made a monthly habit of predicting that inflation has peaked only to see it continue to accelerate.Now, Fed policymakers are analyzing what so many people missed, and what it says about the unrelenting inflation burst.“Of course we’ve been looking very carefully and hard at why inflation picked up so much more than expected last year and why it proved so persistent,” Mr. Powell said at a news conference last week. “It’s hard to overstate the extent of interest we have in that question, morning, noon and night.”The Fed has been reacting. It slowed and then halted its pandemic-era bond purchases this winter and spring, and it is now shrinking its asset holdings to take a little bit of juice out of markets and the economy. The central bank has also ramped up its plans to raise interest rates, lifting its main policy rate by a quarter point in March, half a point in May and three-quarters of a point last week while signaling more to come.Understand Inflation and How It Impacts YouInflation 101: What’s driving inflation in the United States? What can slow the rapid price gains? Here’s what to know.Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.An Economic Cliff: Inflation is expected to remain high later this year even as the economy slows and layoffs rise. For many Americans, it’s going to hurt.Greedflation: Some experts say that big corporations are supercharging inflation by jacking up prices. We take a closer look at the issue. It is making those decisions without much of an established game plan, given the surprising ways in which the economy is behaving.“We’ve spent a lot of time — as a committee, and I’ve spent a lot of time personally — looking at history,” Patrick Harker, president of the Federal Reserve Bank of Philadelphia, said in an interview on Wednesday. “Nothing quite fits this situation.”A recruiter at a job fair in North Miami Beach, Fla., last week. Labor shortages are pushing up wages, which is likely contributing to higher inflation. Scott McIntyre for The New York TimesGas prices have helped drive inflation higher.Scott McIntyre for The New York TimesThe economic era before the pandemic was stable and predictable. America and many developed economies spent those decades grappling with inflation that seemed to be slipping ever lower. Consumers had come to expect prices to remain relatively stable, and executives knew that they could not charge a lot more without scaring them away.Shocks to supply that were outside the Fed’s control, like oil or food shortages, might push up prices for a while, but they typically faded quickly. Now, the whole idea of “transient” supply shocks is being called into question.The global supply of goods has been curtailed by one issue after another since the onset of the pandemic, from lockdowns in China that slowed the production of computer chips and other goods to Russia’s invasion of Ukraine, which has limited gas and food availability.At the same time, demand has been heady, boosted by government pandemic relief checks and a strong labor market. Businesses have been able to charge more for their limited supply, and consumer prices have been picking up sharply, climbing 8.6 percent over the year through May.Research from the Federal Reserve Bank of San Francisco released this week found that demand was driving about one-third of the current jump in inflation, while issues tied to supply or some ambiguous mix of supply-and-demand factors were driving about two-thirds.That means that returning demand to more normal levels should help ease inflation somewhat, even if supply in key markets remain roiled. The Fed has been clear that it cannot directly lower oil and gas prices, for instance, because those costs turn more on the global supply than they do on domestic demand.“There’s really not anything that we can do about oil prices,” Mr. Powell told senators on Wednesday. Still, he added later, “there is a job to moderating demand so that it can be in better balance with supply.”Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Pakistan Raises Fuel Prices in Effort to Stabilize Economy

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    The interim government’s move was seen as a bid to revive a $6 billion bailout from the International Monetary Fund.ISLAMABAD, Pakistan — Pakistan’s government on Friday sharply increased fuel prices for consumers, paving the way to revive a $6 billion bailout package from the International Monetary Fund and stabilize the country’s cratering economy amid deepening political turmoil.The move raising gasoline and diesel prices by about 20 percent — or about 15 cents — a liter staved off concerns that Pakistan, which already faces double-digit inflation, would join a wave of global defaults as the financial shocks from the pandemic, the war in Ukraine and rising interest rates batter many poorer nations.But the decision may cost the new coalition government popular support, analysts say, adding to the political uncertainty that has embroiled the country since Prime Minister Imran Khan was ousted in a no-confidence vote in Parliament early last month.“The price hike signals that the government has decided to bite the bullet and make choices that are necessary, even if they cost near-term political capital,” said Uzair Younus, the director of the Pakistan Initiative at the Atlantic Council. “The hike will ease markets and reduce uncertainty. It will be critical for the government to maintain momentum and continue making decisions that get Pakistan out of the current crisis.”Since his ouster, Mr. Khan has held a series of political rallies, drawing huge crowds and heavily criticizing the current coalition government and the military, blaming them for his removal from office. Some officials now fear that the government’s move to appease the I.M.F. could hand Mr. Khan a wave of public outrage that he could manipulate on the streets.Former Prime Minister Imran Khan, at top center in dark vest, leading an antigovernment rally in Islamabad on Thursday.Aamir Qureshi/Agence France-Presse — Getty ImagesDiscussions between the I.M.F. and the new interim government, led by Shehbaz Sharif, had been deadlocked for weeks over the terms of reviving the bailout, which was announced in 2019 and later suspended after Pakistan’s previous government failed to meet some loan conditions, like cutting energy subsidies.Pakistan has hoped for a release of a roughly $900 million seventh tranche of the $6 billion I.M.F. bailout package. Earlier this week, a fresh round of talks between the I.M.F. and the new Pakistani government in Doha, Qatar, appeared to fail after fund officials declined to accept the Pakistani request to delay the ending of government subsidies.Mr. Sharif had been reluctant to end government energy subsidies and roll back unfunded subsidies to oil and power sectors — a key I.M.F. demand — fearing public backlash that could diminish his party’s chance of success in the next general elections.Those elections are scheduled to be held next year, but the new government has come under mounting public pressure from Mr. Khan’s supporters to hold them earlier.On Thursday, Mr. Khan warned the government to announce the next elections and dissolve Parliament within six days. The warning came just after he led thousands of supporters to the capital Wednesday evening. Angry supporters clashed with the police in the capital and several other Pakistani cities. At least 1,700 protesters were arrested by the police in Punjab, the country’s most populous province.That political pressure has added to the new government’s reluctance to embark on meaningful economic reforms that, while important to stabilize the economy in the years to come, would cause immediate pain to Pakistanis’ wallets, analysts say.The interim government, led by Shehbaz Sharif, center, has been deadlocked in talks with the International Monetary Fund.Saiyna Bashir for The New York TimesLate Thursday night, drivers desperate to fill their tanks before the price increase went into effect after midnight flocked to gas stations across major cities. Many drivers’ incomes have already been squeezed by soaring inflation in recent years that has pushed up the price of basic goods.“There is no rise in our income proportional to the rise in the price of fuel and other essential items,” said Saleem Khan, 44, as he waited to fill his motorcycle’s tank at a gas station in the port city of Karachi.Mr. Khan makes around 18,000 rupees, or about $90, a month working in a restaurant in the city. In previous months, he could send nearly 10,000 rupees every month to his relatives in Bajaur, a tribal district bordering Afghanistan.“This month, it seems I’ll be able to send barely 7,000 rupees to my family,” he said.Nearby, Rasheed Ahmed, a garment factory worker, sat on his motorcycle, worrying how he would pay for basics like food and rent with the fuel price increase.“We thought the ousting of Imran Khan will help the country in decreasing the fuel prices, but the current rulers are crueler than the previous government,” Mr. Ahmed, 34, said.The new coalition government has struggled to find its bearings since coming to power in early April and is in a particularly precarious position. It has no electoral mandate, but was chosen by Parliament to take over after Mr. Khan’s ouster. And it is a tenuous coalition of political parties that previously clashed frequently and only came together around the singular aim of removing Mr. Khan from office. Mr. Sharif’s party also faces internal divisions over policy decisions.A market in Islamabad last month. Many Pakistanis are worried about their ability to afford basic necessities as inflation rises.Saiyna Bashir for The New York TimesMr. Khan’s government, before its removal from office, was also facing increasing public discontent over rising inflation. Mr. Khan claims that the economy was improving under his government, but in order to soothe the public’s flaring tempers, he announced he was cutting petroleum and energy prices — a move that eased public discontent but added to the country’s fiscal deficit.Understand the Political and Economic Turmoil in PakistanCard 1 of 5A chaotic time. More

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    Inflation moderated in April but was still close to its highest level in 40 years.

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    An important measure of consumer prices showed that inflation slowed in April, but remained close to a four-decade high.The Personal Consumption Expenditures price index rose 0.2 percent last month from March and was up 6.3 percent from a year earlier, the Commerce Department said Friday. That is down from a 6.6 percent annual increase in March, which represented the fastest pace of inflation since 1982.Economists and investors closely watch the index, an alternative to the better-known Consumer Price Index, because the Federal Reserve prefers it as a measure of inflation. The central bank has been raising interest rates and announced that it will begin paring asset purchases in a bid to cool the economy and tame inflation.The slowdown in inflation in April was largely the result of a drop in the price of gasoline and other energy sources. Gas prices soared in February and March largely because of Russia’s invasion of Ukraine, then moderated somewhat in April. They have risen again in recent weeks, however, which could push measures of inflation back up in May. Food prices have also been rising quickly in recent months, a pattern that continued in April.Stripping out the volatile food and fuel categories, consumer prices were up 4.9 percent in April from a year earlier. That core measure, which some economists view as a more reliable guide to the underlying rate of inflation, was up 0.3 percent from a month earlier, little changed from the rate of increase in March.The comparatively tame increase in core prices in the data released Friday stood in contrast to the sharp acceleration in the equivalent measure in the Consumer Price Index report released by the Labor Department this month. The divergence was mostly the result of differences in the way the two measures count airline fares, however, and economists said the Fed was unlikely to take much comfort from the Commerce Department data.“My suspicion is they will probably look through the slowdown,” said Omair Sharif, the founder of the research firm Inflation Insights. He noted that the core index also slowed last fall, only to pick up again at the end of the year, catching the Fed off guard.Many forecasters believe that the headline inflation rate peaked in March and that April marked the beginning of a gradual cool-down. But the recent rebound in gas prices is threatening to complicate that picture. And even if inflation continues to ebb, prices are still rising far more quickly than the Fed’s target of 2 percent over time.“For the past year, inflation has been high and rising and we’re at a point now where it’s high and falling,” said Tim Quinlan, a senior economist at Wells Fargo.The public, Mr. Quinlan added, is unlikely to see the slight moderation in inflation as much to celebrate.“To them, the year over year growth in prices doesn’t matter,” he said. “It’s why does a crappy lunch cost $12 now?” More