Price increases in used cars, car rentals — as well as a rebound in airfares, lodging and food — are behind the biggest inflation surge since 2008 as the U.S. economy reopens.
The consumer price index jumped 5.4% from a year earlier, the largest increase since before the worst of the financial crisis, the Labor Department reported Tuesday. Excluding the volatile food and energy categories, inflation increased 4.5%, the largest move since September 1991. On a monthly basis, headline and core prices rose 0.9% against 0.5% Dow Jones estimates.
Looking at item-level data provided by the Bureau of Labor Statistics, prices of used cars and car rentals led the increase in overall prices. The pandemic kept many Americans home last summer, but car rental and sale prices have skyrocketed as many consumers are venturing out of their homes for the first time in months. A global shortage in auto parts and components also exacerbated the price pressures.
For the 12-month period, used car and truck prices leaped 45.2%, while car and truck rental costs skyrocketed 87.7%, the Labor Department reported.
“Consumers have cash in their pockets and rental car companies are looking to rebuild fleets at a time when auto output is being constrained by component shortages,” ING Economics chief international economist James Knightley said in a note.
