Consumer prices rise on back of used cars | Business
September 12, 2020
WASHINGTON – U.S. consumer prices rose 0.4% in August as used car prices surged by the largest amount in 51 years, the Labor Department reported Friday.
The August increase in the consumer price index reflected some moderation following big gains of 0.6% in both June and July as the pace of energy price gains slowed.
However, there were still areas that showed bigger price increases, led by a 5.4% jump in used car prices, the biggest monthly gain since March 1969.
New car prices were unchanged in August but analysts predict prices are likely to rise in coming months, reflecting supply shortages. Motor vehicle production closed completely during the spring as the pandemic shut down wide swaths of the economy.
Other big gains were seen in household furnishings, which jumped 0.9%, the largest monthly increase since February 1991. Prices of furniture, bedding and appliances all showed big gains.
Still, even with the recent gains, inflation increases in the last year are modest. Overall inflation is up 1.3% while core inflation, which excludes energy and food, is up 1.7%.
Used car prices are up largely because auto sales crashed in March and April as factories and dealerships shut down to stop the spread of the novel coronavirus. With few new vehicles sold or produced for about eight weeks, there also were few vehicles being traded in, cutting off supplies.