No it's not your imagination that gas and food prices aren't going down, but an area economics professor says that may soon change.
Despite the up and down gas prices that have hovered over $3 a gallon for months now, gas prices could take a huge dip by the end of the year. That information comes from reports from eia.gov sent from University of West Florida professor Dr. Christopher Burkart.
Currently, the area is paying an average of $3.45 a gallon for unleaded gasoline. Unless a hurricane hits the area, or another natural disaster strikes oil refineries, gas should dip by the end of the year despite the holiday season approaching says Burkart.
"Gasoline futures contracts are actually declining as you look further," Burkart said. "The market is betting that retail gasoline prices will fall over the next four months."
And that could be good news for the area, including the 8.4 percent of locals that are unemployed.
"Regardless, it's nearly impossible (barring a complete implosion of all energy-related commodity markets or a major hurricane/natural
disaster destroying major refinery capacity) for gasoline to rise to $6 a gallon over the next two to three months," Burkart said.
The UWF professor said that when calculating how much inflation has risen, gas prices are actually not at an all time high right now.
"The current real price of gasoline (adjusted for inflation) is roughly what we paid in early 2008 (before the summer 2008 price spike) and is projected to go down to roughly 2005-era prices over the next year," according to Burkart. "In fact, the real price of gasoline in August of this year was still below the high prices of the late 1970s."
And even if the area experiences a spike in gas prices, Burkart said that food prices would not rise with the change. Food prices have been on the rise for years now, but Burkart said that a spike in gas prices doesn't necessarily equate to a spike in food prices. At least not right away.
"Nominal food prices are certainly increasing, along with the nominal price of nearly everything else," Burkart said. "This is nothing unusual and is generally a good thing in that it's a sign of positive economic growth."
According to data compiled by Burkart, over the last year, food prices have risen approximately two percent. But Burkart said that fuel isn't the main contributor to the price increases.
"Food at home (purchased from a grocery store) has gone up only about 1.5%, while food away from home (restaurant meals) has gone up 2.8%," Burkart said. "Even if there were a large sustained increase in fuel prices, it would likely take several months for that to have any
impact on food prices."
He said that with the rise in restaurant meals, more people are looking for home cooked meals rather than restaurant meals.
" It seems logical that, if restaurant meal prices are rising faster than grocery store food prices, people will eat out less, all else being equal," Burkart said. " However, if incomes rise with inflation, most consumers will not change their behavior as the real purchasing power of their income is unchanged."
But even with rising fuel prices, Burkart said that most of the bigger food giants shouldn’t have to increase their prices.
“Foods that involve large fuel costs in their production/delivery are operated by firms that guard against increases in fuel costs by purchasing futures contracts,” Burkart said.
Even though gas prices could affect food prices in the long run, he said sometimes people have to look to mother nature to blame for most rising food prices—especially when they jump up quickly.
"A much more important and realistic driver of increased food prices in the short term is likely to be this summer's drought in the Midwest," Burkart said. "Harvest yields over the next two months will determine how large that effect is."
Last year, the local area, and also most of the Midwest, experienced a drought that diminished yields.
This year, the Midwest experienced a similar heat wave, while the local area saw an abundance of rainfall.