Jan 13, 2022 - Economy

Inflation microcosm: Used-car price surge continues

Data: U.S. Bureau of Labor Statistics via FRED; Chart: Axios Visuals

Consumer Price Index data released Wednesday showed used-vehicle prices continue to surge. As of December, they were up 37% compared to the previous year.

Why it matters: Analysts have been watching used-vehicle prices as a microcosm of the broader U.S. inflation story, encompassing both the disarray of global supply chains and the surge in demand for goods.

  • Prices of used cars and trucks were the second-biggest driver — after shelter — of the monthly increase in consumer prices in December, responsible for almost a quarter of the change.

The big picture: The global chip shortage has slowed vehicle assembly lines worldwide, driving a wave of buyers to the used-car market and prices sharply higher.

What's next: Not relief. A forward-looking gauge of wholesale used-car prices that tends to predict the direction of consumer prices surged yet again in December, suggesting upward pressure on cars — and inflation more broadly — shows no signs of abating.

Go deeper: Inflation hit 7% in December, highest since 1982

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