Are We Headed for $5 Gas? What May's CPI Report Revealed
Most Americans aren’t paying $5 per gallon for gasoline — yet. However, if May’s inflation report is any indication, fuel costs are once again becoming a major source of financial strain for the nation’s drivers.
What the CPI Told Us About 2026 Gas Prices So Far
According to the latest consumer price index (CPI) report from the U.S. Bureau of Labor Statistics (BLS), inflation ramped up in May, with consumer prices spiking 4.2% over the last year and 0.5% for the month. Additionally, while inflation is impacted by several factors (especially in the last decade, which has seen a pandemic and the Iran war), the May CPI report indicates one specific category is acting as a major inflation driver: energy.
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The energy index rose 3.9% in May, a spike that was responsible for more than 60% of the leap in overall inflation. Specifically, gas prices leapt 7% during the month and are currently up 40.5% when compared to this time last year.
While these may seem like boring numbers and percentages, you are feeling them every time you pay at the pump.
According to AAA, the national average price for regular gasoline is $4.11 as of June 12. While that’s still a bit below the all-time record high gas price of $5.02 in June 2022, it’s still much higher than what drivers have been accustomed to in recent years – and it only seems to be getting higher, especially with fuel supply line disruptions and shortages due to the ongoing instability in Iran.
This is why the CPI is so important – it’s the definitive measurement of inflation, and its tracking of cost shifts of everyday goods and services can help us predict what things will cost in the near future.
So, Are We Headed for $5 Gas or Not?
Although the West Coast states have been paying over $5 for several months now, we’re still nearly $1 away from a national average of $5.
Secondly, the May CPI report doesn’t quite answer the question as to whether we’ll be hitting that $5 mark anytime soon. What the complex CPI report does tell us is that gas prices are shooting upwards at such a speed and at such a height that they are becoming a major contributor to overall inflation (as was the case in 2022).
Gas becoming an inflation driver matters because it can rewrite the entire budget of your household – higher gas prices increase your driving and commuting costs; they change the cost of vacations, of ride-shares and deliveries; and they raise transportations expenses for businesses (which then gets passed onto the consumer, making the cost of everyday items increase).
That said, the CPI report does point toward the possibility of gas exceeding $5 per gallon. Kalshi, the federally regulated financial exchange that is exclusively dedicated to trading on the outcomes of future events, currently predicts with the new CPI data that there is a 36% chance that we’ll all be paying over $5 per gallon at the pump before the end of the year.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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