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Why are gas prices dropping while grocery prices rise?
I see gas prices dropping left and right, especially since the economy started to go into a crisis with the DOW and all losing so many points recently. Where I live, gas prices are about $2.79, forty minutes away I heard it's $2.49, and into Ohio I heard that it fell to $1.99 today. I can't remember the last time gas was under $2.00 per gallon!
So, gas prices are lowering and making things a little bit easier, but why are grocery prices rising still? I would assume that since transportation (the gas the vehicles use is what I'm going by) is cheaper for shipping then prices of groceries would fall along with the gas prices.
Is there a good reason why gas is lowering but food is still going up? I don't understand why gas prices are lowering anyway! Can someone please explain what is going on now?!
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gas prices are dropping because people arnt filling their cars as much. less vacations less driving or walking, ridings bikes, public transportaion.. food prices are going to stay going up ( although i heard wal mart was going to cut their prices although im not sure how true that is) everyone needs to eat so everyone will continue buying food.
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Now that there is an economic crisis, production levels are lower, so the supply is reduced, and this puts upwards pressure on the price. Now, the demand for groceries is inelastic because one needs to eat no matter what, and so the grocery prices rise.
On the other hand, the demand for gas is elastic. If people can't afford it, they'll just have to resort to alternatives such as walking, cycling, or public transport. The economic crisis is causing people to lose money, so many people are less able to afford gas, so the demand decreases, and the price also decreases.
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i can give you my conspiracy theory, which i called 2 years ago, saying that gas prices would drop around the time of the election, to not leave a bad taste in peoples mouth about a republican presidency. as for food prices, well, people are still buying them at high prices, so why would stores lower them if that would just make them lose money?
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