US household auto policy inflation advances again, now at 22.2% y/y
US average retail automotive policy inflation rose again to an annual rate of 22.2%, still a double-digit lead over the only lingering source of claims inflation, repair costs, which also rebounded for the month.
The 2.6% sequential rise in seasonally-adjusted average auto policy costs in March is the 27th consecutive month of price increases, a period that took the headline annual inflation rate up from a local low of 4.1%.
On the claims side, motor vehicle repair inflation at 11.6% was a sharp rebound after two months of having dipped into the single digits. Repair inflation, still the highest reading amongst claims cost categories, has now been below policy price inflation for eight months, with a double digit gap for four months.
Other claims inflation categories remain soft. Used vehicles have been in annual deflation since late 2022 and parts and equipment have held negative headline readings for seven months. Data for body work, last at a 3.1% annual inflation rate, was missing from the March print.
Measured against pre-pandemic pricing levels from end-2019, the 44.5% cumulative gain in auto policy costs still lags the cumulative 48.7% gain in vehicle repair costs after having caught up with used vehicle inflation only by end-2023.
Against the equal-weighted mean of four key cost categories [used vehicles, parts, body work (prior month reading), repair – all seasonally unadjusted], policy cost increases have outpaced cumulative cost inflation for six months running, now by 11.3 percentage points, versus a double-digit deficit as recently as June 2023.
For the broader economy, consumer price inflation rose 0.3 percentage points from the February reading to a seasonally adjusted 3.5% with core inflation in advance of that rate.
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
