While headline inflation held steady in July, tariffs appear to be hitting some imported goods like furniture and audio and video products, according to the latest consumer price index report from the Labor Department.
One source of relief for consumers? Prices at the pump. The latest CPI report shows July prices were down 2.2% from June and 9.5% from the year prior. The national average for a gallon of regular unleaded as of Aug. 12 was $3.14, according to AAA, down from $3.44 a year ago.
Prices could continue to slip in the months ahead as the weather cools and oil production ramps up.
“Gas prices are lower than they were a year ago. That has really persisted this year and given some confidence to the consumer to feel a little bit more wealthy at a time when there’s inflation everywhere else,” said Matt Smith, an oil analyst with commodity data firm Kpler. “They’re definitely providing, and should provide, a bit of a respite going forward.”
Gas prices ‘steady’ in 2025
The best way to describe gas prices so far this year? “Steady,” especially when compared to recent years with dramatic swings like 2022, according to AAA spokesperson Aixa Diaz.
“It’s certainly good news for drivers,” Diaz said.
Increased output from oil producers has helped keep prices stable, with Brent crude – the world benchmark for oil prices – largely trading between roughly $60 and $70 per barrel in recent months.
The group of oil-producing countries known as OPEC+ has hiked production to regain market share, according to Smith, and shows no signs of slowing after announcing plans to boost production again in September. Meanwhile, U.S. crude oil production hit record highs this year at more than 13 billion barrels per day, and smaller oil producers like Brazil and Guyana have also increased output.
“We’re seeing a lot of supply come to market to outpace demand, so that should weigh on gasoline prices,” Smith said.
Where does inflation stand? CPI report reveals inflation held steady in July as tariffs threatened wider impact
How low will gas prices go?
Gas prices could continue to fall in the months ahead if oil production remains elevated. The U.S. Energy Information Administration expects Brent crude oil prices to fall from an average $71 per barrel in July to $58 per barrel in the last three months of the year, then down to $50 per barrel in early 2026.
Prices at the pump could also see relief as the weather cools and refineries switch from summer blends to cheaper winter blends.
“I fully expect we’ll see this drop from $3.15, where they’re at now, to below the $3 per gallon mark,” Smith said. “Probably into October. That’s where we could really start to see a charge toward $2.50.”
But there are threats that could push prices higher. Hurricane season, for instance, hits its peak in September, driving up the risk for damage to U.S. refineries near the Gulf Coast. Geopolitical tensions could also affect prices.
“If we do see (President Donald) Trump taking a harder line on trying to punish Russia and stop countries like India buying its crude, that could cause oil prices to rally,” Smith said. “That’s the biggest wild card for the oil market, and therefore gasoline prices.”
This article originally appeared on USA TODAY: Gas prices are down. How low will they go?
