Lodging, Used Cars Stand Out Among Pandemic Reopening Categories

Looking at the CPI categories that have been volatile in the pandemic reopening period:

• Following on from our earlier note on core goods: used car and truck prices print another month above 4% (4.42% vs 4.45% prior, had been seen rising between 1-4.5%) and stand out as easily the biggest gainers in this category of components.
• New car prices slipped for a 2nd month, -0.4% M/M vs -0.3% prior.
• Travel categories mostly pulled back: airfares dropped 3% M/M after falling 2.6% in April (expectations had been between -2 and +2%), while car/truck rentals dropped by over 3% for the 3rd consecutive month (-3.3%).
• The outlier in travel is lodging, which rose by 2.1% M/M (higher than most expectations which centered around +0.75%) after an unexpected -3.4% drop in April, boosting overall shelter prices.
• Overall the price indices for these categories are above pre-pandemic levels, but well off the peak as well.
• The range is wide though: airfares are just 6% above where they were in Feb 2020, whereas used car prices are 44% higher - mean reversion is expected for the latter.