Since January 2020, NEW car prices have increased 9.6%. But USED car prices are up 16.7% over the same period.
This is pretty extraordinary given that used cars are supposed to depreciate. According to one used car dealer, "What is normally a depreciable asset has been appreciating. It's certainly surreal. . ."
It's not just used cars, of course. Prices across the economy are rising rapidly. NielsenIQ retail price data sets show that consumer goods have been rising in excess of 10% over the last year on everything from beauty products to seafood prices (which have risen by 18.7% over the past three months).
There are lots of reasons for inflation.
For example, there's plenty of pent-up consumer demand from people having been locked down for more than a year, at a time when many businesses are still closed or operating at below normal capacity.
This combination of high demand and tight supply is causing prices to rise. And in theory that's a temporary phenomenon.
But there are other, more permanent factors that could continue pushing prices up for a long time.
For starters, governments around the world are proposing higher taxes– carbon taxes, Value-Added Taxes, higher corporate income taxes. This is all inflationary, because eventually these tax costs are passed on to consumers.