A few years ago, Yvonne Ferguson-Hardin had no trouble finding a used car for her oldest daughter. This year, car shopping for her younger daughter has been harder. And stranger.
One online seller never showed up to a meeting. Another was actually selling toy cars instead of real ones. Then there are the prices: In 2018, Ferguson-Hardin said, she paid $2,500 for a 2008 Honda Civic. Now, she sees prices twice as high for similar cars.
“We’re looking at the price in comparison to the miles. It’s just really, really overpriced,” said Ferguson-Hardin, 56, of Philadelphia.
Consumers are paying higher prices for a lot of things these days, from used cars and gasoline to groceries and plane tickets. The Consumer Price Index jumped 5.4 percent in June compared with the same month last year, the largest 12-month increase since 2008, according to the U.S. Labor Department.
The inflation is a result of the rapid reopening of the economy, experts said. In some cases, such businesses as hotels, airlines, and rental car companies are normalizing their prices after slashing them during the pandemic. In others, the supply side of the economy can’t keep up with the surge in consumer demand because the coronavirus has disrupted supply chains.
“It’s Econ 101. More demand than supply means higher prices,” said Mark Zandi, chief economist at Moody’s Analytics. “It’s uncomfortable. It’s painful. But it’s typical. Same thing happens after every recession.”
The Consumer Price Index measures the average change over time in prices paid by consumers for a range of goods and services, including clothes, groceries, electronics, and restaurant meals. It increased 0.9 percent from May to June.
Prices for used cars and trucks rose 10.5 percent last month, accounting for one-third of the overall index, the department said. June was the third straight month that used-vehicle prices rose sharply.
Automakers can’t get enough semiconductor chips to produce cars, causing a supply shortage of vehicles. Because consumers can’t get new cars, demand for used vehicles has increased, said Jim Appleton, president of the New Jersey Coalition of Automotive Retailers. But for dealerships, the biggest source of used vehicles is trade-ins on new cars, so the supply of used vehicles is down, too. “It’s kind of a perfect storm,” Appleton said.
The index for airline ticket prices continued to increase, rising 2.7 percent in June as more consumers traveled in the spring and early summer. Delta Air Lines president Glen Hauenstein said Wednesday that demand for air travel came back at an “accelerated rate” from April through June.
Even though airfare is rising broadly, there are good deals to be found — particularly on flights to city destinations, rather than the outdoorsy locales that have been popular during the pandemic.
“The city is where it’s at this summer for deals,” said Mel Dohmen, senior brand manager with CheapTickets. “Cities across the U.S. have had different reopening schedules coming out of the pandemic, which means a lot of affordability still for travelers and available inventory.”
CheapTickets compared price points for summer 2021 travel with pre-pandemic summer travel in 2019, and found that it’s now 30 percent cheaper to fly to destinations such as Miami, Chicago and Los Angeles. It’s 25 percent cheaper to fly to such cities as Detroit, Minneapolis, and Atlanta this summer than it was two years ago, and 20 percent cheaper to book a flight to Phoenix, New Orleans and Las Vegas, according to the budget travel brand.
Across the U.S., gas prices rose 2.5 percent over last month, the department reported.
Zandi said the sharp rise in inflation should be temporary, noting the price increases that occurred after previous recessions. “If history is a guide — I think it’s a good one — I think we don’t have anything to worry about here.”