driving up the prices

Cars are driving up inflation

July 13, 2021

.polaris__post-meta--date { display: none; } .polaris__post-meta--date.no-script { display: block; padding-left: 45px } July 13, 2021

The U.S. consumer index price jumped significantly in June, registering increases of 0.9 percenct from May and 5.4 percent year-over-year, Bloomberg reports.

Cars — used, new, rental, you name it — were the main culprit behind the surge, but there are signs that could soon change, and the Federal Reserve and many economists remain confident that inflation is still transitory.

The rising price of used cars accounted for about a third of overall inflation in May. But there are signs that price pressure in the used car market is easing. https://t.co/pyT6IRufwr
— scott horsley (@HorsleyScott) July 8, 2021

The White House Council of Economic Advisers noted that, in addition to cars, several sectors heavily affected by the COVID-19 pandemic, like airfare, hotels, and live events were at the heart of the increase. Excluding those industries, core inflation actually increased more slowly in June than the previous two months, the council found.

Without cars and pandemic-affected services, core inflation rose 0.22 percent month-over-month, relative to 0.28 percent in May and 0.31 percent in April 4/ pic.twitter.com/ZQsigWt5OL
— Council of Economic Advisers (@WhiteHouseCEA) July 13, 2021

As Carl Tannenbaum, the chief economist for Northern Trust, put it, the June increase was "once again driven by an outsized increase in the price of a small category," while "bigger components (like shelter) are still well-behaved."