Energy, Gas | featured news

WASHINGTON (Reuters) - Consumer prices rose modestly in March amid signs a spike in gasoline costs was ebbing, but inflation still outpaced workers' earnings and threatened to undermine consumer spending.

This year's surge in gas prices appears over, falling short of the record highs some had feared heading into peak summer driving season.

Several factors are behind the relative complacency now compared with the price surge of 2008, analysts say. Gas prices have soared about 15% in the last six months, hitting $3.94 a gallon on average nationwide, and $4.29 in California.

For the majority of the country, $4 gas isn’t going to doom us or our economy. Here’s why.

How much are Americans freaked out by the prospect of paying $4 a gallon at the pump? A whole lot ... and not at all. Like a lot of carless New Yorkers, I am generally confused by bursts of populist outrage over high gas prices. But I have always assumed that the anger is genuine — that hard-working Americans, who already spend a lot on gas, are thrown into turmoil when they have to spend even more. After all, 63 percent of Americans insist that these price increases have caused them some financial hardship.

For all the domestic political talk about high gas prices, President Obama says one major factor can be traced overseas: Iran.

Families canceling vacations. Fishermen watching their profits burn up along with their boats' gasoline. Drivers buying only a few gallons of gas at a time because they can't afford to fill the tank. From all corners of the country, Americans are irritated these days by record-high fuel prices that have soared above $4 a gallon in some states and could top $5 by summer. And the cost is becoming a political issue just as the presidential campaign kicks into high gear.

Gasoline prices have never been higher this time of the year. At $3.53 a gallon, prices are already up 25 cents since Jan. 1. And experts say they could reach a record $4.25 a gallon by late April.

Consumers paid more for food and gas last month, although inflation outside those volatile categories was tame. The Labor Department says the Consumer Price Index rose 0.3 percent in September, below a 0.4 percent rise in August. Excluding food and energy, so-called core prices increased 0.1 percent, the smallest rise since March.