Soaring prices for used cars, gasoline, food and airline tickets are pushing up inflation

Used car price hikes, car rentals – as well as a rebound in air fares, accommodation and food – are behind the biggest rise in inflation since 2008 with the reopening of the US economy.

The consumer price index jumped 5.4% from a year earlier, the biggest increase since before the worst of the financial crisis, the Labor Department reported on Tuesday. Excluding the volatile food and energy categories, inflation rose 4.5%, the biggest move since September 1991. On a monthly basis, overall prices and basic prices increased by 0 , 9% against 0.5% according to Dow Jones estimates.

Looking at the article-level data provided by the Bureau of Labor Statistics, used car prices and car rentals led the overall price increase. The pandemic kept many Americans at home last summer, but car rental and sale prices have skyrocketed as many consumers venture out of their homes for the first time in months. A global shortage of auto parts and components has also exacerbated pricing pressures.

In the 12-month period, used car and truck prices jumped 45.2%, while car and truck rental costs climbed 87.7%, the department reported. work.

“Consumers have money in their pockets and rental car companies are looking to rebuild their fleets at a time when auto production is constrained by component shortages,” said ING’s chief international economist Economics, James Knightley, in a note.

Bank of America economists believe this may be the spike in used car prices as the increase in sticker prices for consumers has now outpaced the increase in wholesale car prices second hand, which started to moderate in June.

In addition, several types of fuel, including gasoline, fuel oil and other fuels, were among the categories that saw the largest price increases. Gasoline futures have climbed more than 60% this year as Americans embarked on a post-pandemic driving spree.

Meanwhile, categories related to the pandemic’s broad economic comeback have also contributed to the spike in inflation.

Public transportation, which includes air fares, saw an increase of 17.3% year-over-year, while accommodation away from home, including hotels and motels, saw an increase by 16.9% year on year.

During Memorial Day weekend, air traveler volumes hit the highest levels since before the start of the coronavirus pandemic. And demand for air travel is expected to rebound amid the peak summer vacation season.

Excluding the increase in prices for used cars, new cars, accommodation and transportation services, the core CPI would have increased only 0.18% on a month-over-month basis, which in normal times would be a relatively healthy price increase, according to Bank of America.

Some grocery stores and food products have also seen price increases in recent times. Notably, fresh fruit, limited-service meals and snacks, and food from vending machines all saw an increase of at least 5% year-over-year.

PepsiCo and Conagra Brands said Tuesday they plan to pass higher input costs on to customers as inflation accelerates. Both cited rising costs for some ingredients, freight and labor.