Inflation in the US: Will domestic airplane tickets be cheaper this summer of 2023?

The Bureau of Labor Statistics (BLS) reported that in April, prices increased by an average of 0.4 percent, driven primarily by increases in the price of housing, used cars and trucks, and gasoline. Many are beginning to plan their summer vacations and may find that inflationary pressure is still driving up the price of air travel and lodging, which could put a serious dent in travelers’ wallets.

Airfare prices come down...

Airfare prices in April fell by 2.6 percent after increasing by 10.4 percent in the first three months of the year. The Russian invasion of Ukraine led to a rapid increase in the price of air travel, rising fifty-one percent from January to May 2022. Due to the imposition of sanctions on Russian energy commodities, the global supply of fuel decreased, resulting in a rise in fuel prices, especially for jet fuel which requires extensive refining. Consequently, firms have transferred the increased costs to consumers.

Over the last year, according to data from the US Energy Information Adminstration, the US stock of jet fuel has increased by seven percent. In January and February 2022, the US refined 496,000 barrels of jet fuel. Over the same period this year, the US refined 532,000 thousand barrels.

Should production continue to increase, prices should come down even further. However, as we move towards the summer months and demand for air travel increases, ticket prices could begin to tick up once again.

Hotels tell another story...

While prices for airfare are on the decline, those for lodging away from home, including hotels, motels, and resorts, have risen three percent since April 2022. However, prices fell slightly from March to April 2023 after rising 5.7 percent from January to March.

As demand begins to rise for both lodging and airfare, prices are likely to remain high or increase.