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Used Car Prices And Rental Car Rates Continue To Rise To Absolutely Bonkers Levels
Used Car Prices And Rental Car Rates Continue To Rise To Absolutely Bonkers Levels-October 2024
2024-02-19 EST 22:09:31

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We mentioned over the , and now we have some hard data on just how ridiculous the rise actually is. The Consumer Price Index released by the U.S. Labor Department Thursday shows used car prices rose another 7.5 percent last month, after rising 10 percent in April for a 30 percent rise for the year so far, the reports.

Consumer prices in general jumped 5 percent over last year, the quickest prices have gone up since 2008:

The surged 5 percent in May from a year earlier, the Labor Department said on Thursday. Economists had expected an increase of 4.7 percent. Prices rose 0.6 percent from April to May, and an index that excludes volatile food and energy costs rose 3.8 percent from a year earlier, the briskest pace since 1992.

Prices are rising for many goods and services, as varied as airfares and used cars, the result of and strong consumer demand as a pandemic-stricken economy comes roaring back. Government officials and many economists have said much of the jump is likely to fade with time as the economy gets past a reopening bounce and supply catches up. The annual number in particular is getting a boost from what’s called a base effect: The year-ago figure was depressed by shutdowns, so the current readings look large by comparison.

The causes of this price surge have been covered before, but the short answer is a depressed pandemic-economy is roaring back to life, creating a bottleneck on goods and services. The semiconductor chip shortage is one such bottleneck, which is making new cars harder to find thus adding a second pressure on the demand for used, already built vehicles. Just remember, this is a weird time in the market and . When this weird time will end though, is anyone’s guess. From the Times again:

But the big monthly figure for May, on the heels of a , showed that prices have been moving up quickly for more than just technical reasons. The critical question is whether those stronger-than-expected price pressures are a transient trend tied to reopening or something more persistent.

“We are at peak heat, this is the moment,” said Julia Coronado, founder of the research firm MacroPolicy Perspectives. “We know we’ll get a fade — the question is, how big is the fade?”

Ms. Coronado, like many economists, expects inflation to settle down and remain in line with the Federal Reserve’s 2 percent average goal over time. The Fed uses a different index, the , to define its target. That gauge is closely linked to C.P.I., though it tends to run slightly below it.

Used car prices werem’t the only things to jump over last year. It seems all forms of travel are seeing a surge as folks sick of staring at their own four walls during COVID-19 lockdowns hit the road. Rental car companies, which ditched a ton of vehicles last March at the start of the pandemic when they were losing money hand over fist, are now dealing with demand far outpacing supply. Prices for rental cars rose an astonishing 12 percent last month alone! Hotels and airfares are also skyrocketing.

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