This paper investigates the response of consumer price inflation to changes in domestic fuel prices, looking at the different categories of the overall consumer price index (CPI). We then combine household survey data with the CPI components to construct a CPI index for the poorest and richest income quintiles with the view to assess the distributional impact of the pass-through. To undertake this analysis, the paper provides an update to the Global Monthly Retail Fuel Price Database, expanding the product coverage to premium and regular fuels, the time dimension to December 2020, and the sample to 190 countries. Three key findings stand out. First, the response of inflation to gasoline price shocks is smaller, but more persistent and broad-based in developing economies than in advanced economies. Second, we show that past studies using crude oil prices instead of retail fuel prices to estimate the pass-through to inflation significantly underestimate it. Third, while the purchasing power of all households declines as fuel prices increase, the distributional impact is progressive. But the progressivity phases out within 6 months after the shock in advanced economies, whereas it persists beyond a year in developing countries.

On April 25, 2006, Pres. Bush directed ¿the Dept. of Justice to work with the Fed. Trade Comm. (FTC) & the Energy Dept.(DoE) to conduct inquiries into illegal manipulation or cheating related to current gasoline prices.¿ The FTC was, at that time, investigating the increases in gasoline prices that occurred following Hurricane Katrina, including an intensive examination of whether refiners & other market participants had manipulated, or tried to manipulate, gasoline prices. The FTC found no evidence of manipulation & only limited instances of price gouging by gasoline wholesalers & retailers. The FTC & DoE conducted this economic analysis & investigation of the nat. avg. gasoline price increases that began during the spring of 2006 & continued through the summer. Illus.