I’m not a “car person” like many on METAR (such as @steve203). But it’s clear that car sales are important to inflation.
The U.S. auto industry accounts for about 2.5% of value added in the U.S. private sector. As we have learned though over the past two and a half years, this sector still has the potential to cause wide swings in output generally, and spending more specifically.
Because of supply chain problems, car manufacturing was suppressed during the Covid pandemic. The lack of new cars drove up the price of used cars dramatically, impacting inflation.
The Fed’s rising interest rates will reduce the amount that consumers can afford to pay for a car. That’s part of the strategy to reduce inflation.
Wells Fargo economists expect vehicle inflation to go from leading the charge of higher inflation to leading its eventual retreat. Used vehicle prices have already started to roll over after a meteoric rise, and with fading pent-up demand from consumers alongside higher financing costs and inventories, the extraordinary price growth among new vehicles is also set to fade. When combined, they look for new and used vehicles to become a drag on the year-over-year rate of inflation as soon as the first half of next year.
The linked article has a lot of data that might be of interest to car buffs. On a Macro scale, I’m interested in the timing of falling inflation.