Business
Inflation: Used Car Prices Records Highest Monthly Increase in 14 Years
Used car prices rose for the third consecutive month in February, as the wholesale market for second-hand autos experienced increased inflation.
In February, the used car wholesale auction price index maintained by Manheim increased by 4.3 percent. Prices were up in December, the first month-to-month gain since May of 2022, and rose 2.5 percent in January. The growth in February represented the biggest monthly improvement since February 2009.
Manheim’s wholesale index is regarded as a major predictor of retail prices for both new and used cars. Last year’s drop in the wholesale index signaled a drop in used automobile prices that would be observed months later in the Consumer Price Index.
About 4.5 percent of the core Consumer Price Index, which excludes costs for food and fuel, is made up of used-car pricing. As a result, rising used automobile costs can push up the overall measure of inflation. In 2021, a sharp rise in used car prices was a leading indicator of more widespread inflation.
Since they are so adaptable and responsive to market conditions, used automobile prices can occasionally be a leading predictor of inflation. Some prices take longer to change in response to demand changes. As a result, the used car market may be the first to experience inflationary pressures.
Despite the gains in the past three months, used automobile costs remain lower than they were a year ago. Compared to a year ago, the Manheim Used Vehicle Value Index is down 7.0 percent, which is a far smaller loss than the 12.8 percent yearly drop seen a month before.
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