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Soaring Used Car Prices Named as Key Reason for Skyrocketing Inflation

The Bureau of Labor Statistics reports the cost of previously owned sedans, pickups, and SUVs climbed 10% in April, accounting for over one-third of the 0.8% CPI increase.

May 14, 2021
Soaring Used Car Prices Named as Key Reason for Skyrocketing Inflation

The Bureau of Labor Statistics reports the cost of previously owned sedans, pickups, and SUVs climbed 10% in April, accounting for over one-third of the 0.8% CPI increase.

1 min to read


The latest U.S. consumer price index (CPI) data shows inflation rose to 4.2% instead of the expected 3.6%, and some blame skyrocketing prices for used cars as the reason why.

The Bureau of Labor Statistics reports the cost of previously owned sedans, pickups, and SUVs climbed 10% in April, marking the fastest increase ever since 1953. This increase accounts for over one-third of the 0.8% CPI increase, experts report.

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The automotive industry is making fewer new vehicles as automakers struggle with a critical semiconductor shortage and heightened competition for raw materials. In fact, top auto manufacturers warn that without needed chips, a potential 1.3-million shortfall in U.S. car and light-duty truck production will result.

As the semiconductor shortage slashes vehicle production, rental car companies began buying used vehicles at auction and retail consumers started meeting their transportation needs in the used car market.

The shift has caused wholesale prices to soar. Wholesale prices rose 54% in April over 2020 levels at Manheim, the nation’s largest vehicle auction company.

Riding inflation is not expected to continue, report analysts.

Economic analysts maintain the increase in used car prices will ease as production ramps up and demand subsides. In fact, economists predict a return to normal inflation levels of around 2% by the end of the year.

Originally posted on Auto Dealer Today

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