MNI BRIEF: Rising Used Car Prices Likely to Push Up July CPI

Used car prices rose again through July, hinting at another month of high inflation after four consecutive months of record annualized CPI readings. The average listing price of a used vehicle increased USD56 to a record USD25,437 in July, according to data from Cox Automotive, the parent company of online vehicle retailers Autotrader and Kelley Blue Book. That's 28% higher than the average listing price one year ago and 31% higher than the average listing price in 2019.

Used vehicle price increases accounted for more than a third of month-over-month CPI increases in April, May, and June, according to the Bureau of Labor Statistics. June CPI was up 0.9% month-over-month and up 5.4% from a year earlier, the highest reading since 2008. CPI in July is expected to increase 0.4% m/m and 5.4% y/y.

Used vehicle prices are likely to soften in coming months, Michelle Krebs, an analyst at Autotrader, told MNI, as wholesale prices have already started to fall. But tight new vehicle inventory stemming from supply shortages and plant shutdowns should still keep used vehicle prices relatively high as buyers move from the new market to the used market.