Both can, and are, true:
Figure 1: Regular gas price deflated by PCE deflator (blue, log scale), month-on-month growth rate of real gas price (red, right scale). April PCE is Cleveland Fed nowcast of 5/11. Source: EIA, BEA, Cleveland Fed, and author’s calculations.
Gas prices are indeed relatively low in inflation adjusted terms. However, the rate of change has outstripped the 2022 Russian invasion induced increase, as well as that of the pre-Great Recession surge.
What’s the impact on retail sales? Here’s a picture through April.
Figure 2: Change in retail sales (black line), change in retail sales ex-gasoline stations (blue bar), change in retail sales from gasoline stations (red), all in millions $, s.a. Source: Census.
The change in sales from gasoline stations is larger in both nominal and real terms than the March 2022 jump.
Gasoline is widey thought of as having short run inelastic demand; however, ove the last decade, there’s been a revision in the view pertaining to the quantitative magnitude — with the range now from -0.27 to -0.35. With the real price having risen by about 23% from February to April, then gasoline consumption should fall by about 7%.
Gelman et al. (AEJ Macro 2023) reports that the marginal propensity to consume out of savings from lower gasoline prices is about unit. If there is symmetry with respect to price changes, then one should expect about an equal decline in non-gasoline spending over time.