We mentioned Used car prices seem to be climbing this weekend, And now we have some hard data on how ridiculous the rise is actually. The Consumer Price Index released by the U.S. Department of Labor on Thursday showed that second-hand car prices rose by 7.5% last month, after a 10% increase in April, and a 30% increase so far this year. New York Times report.
Consumer prices have increased by 5% over last year, the fastest increase since 2008:
This Consumer price index The U.S. Department of Labor said on Thursday that it was up 5% year-on-year in May. Economists had expected an increase of 4.7%. Prices rose by 0.6% from April to May, and the index excluding volatile food and energy costs rose by 3.8% year-on-year, the fastest growth rate since 1992.
The prices of many goods and services are rising, including airline tickets and used cars, and the result is bottleneck As the pandemic-affected economy makes a comeback, strong consumer demand. Government officials and many economists say that as the economy passes the rebound period of reopening and supplies catch up, most of the gains may fade over time. In particular, the annual figures are getting a boost from the so-called base effect: the figures from a year ago were suppressed by work stoppages, so the current reading looks large in comparison.
The reasons for this price spike have been discussed before, but the short answer is that the sluggish pandemic economy is recovering, which creates a bottleneck for goods and services. The shortage of semiconductor chips is such a bottleneck, which makes it more difficult to find new cars, thereby increasing the second pressure on the demand for second-hand cars.Remember, this is a strange time in the market Usually your used car will not appreciate. However, no one can guess when this strange time will end. From the Times again:
But it’s followed by the big monthly data for May. Sharp rise in April, Indicating that prices have been rising rapidly, not just for technical reasons. The key question is whether those stronger-than-expected price pressures are short-lived trends related to reopening or longer-lasting trends.
Julia Coronado, founder of the research firm MacroPolicy Perspectives, said: “We are at the peak and now is the time.” “We know we will fade – the question is, how big is the fade?”
Like many economists, Ms. Coronado predicts that over time, inflation will stabilize and be in line with the Federal Reserve’s 2% average target. The Fed uses different indexes, Personal consumption expenditure measurement, Define its goal. This indicator is closely related to CPI, although it tends to be slightly lower than it.
Used car prices were not the only factor that increased last year. It seems that all forms of travel are proliferating because people are tired of staring at their four walls during the COVID-19 lockdown.Car rental companies lost a lot of vehicles at the beginning of the pandemic in March last year, when they were losing money, Now dealing with demand far Exceed the supply. Car rental prices have risen by a staggering 12% in the last month alone! Hotels and air tickets have also skyrocketed.