US household auto policy inflation holds above 20%, well above claims
US average retail automotive policy inflation held above 20% for the third month running, a double-digit lead over the only lingering source of claims inflation.
The 1.5% sequential rise in seasonally-adjusted average auto policy costs in February is the 26th 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 8.5%, was down sequentially from January but still just half of what it was just six months ago. Repair inflation, still the highest reading amongst claims cost categories, has now been below policy price inflation for a full seven months. Body work inflation is down to 3.1%.
Both parts and equipment and used vehicles remain in annual deflation, vehicles since late 2022 and parts now for six months. Monthly sequential pricing has turned variable.
Measured against pre-pandemic pricing levels from end-2019, the 39.8% cumulative gain in auto policy costs still lags the cumulative 44.3% gain in vehicle repair costs after having caught up with used vehicle inflation only by end-2023.
Against a simple equal-weighted average of four key cost categories (used vehicles, parts, body work, repair – all seasonally unadjusted), policy cost increases have outpaced cumulative cost inflation for five months running, now by 8.7 percentage points, versus a double-digit deficit as recently as June 2023.
For the broader economy, consumer price inflation rose a notch to a seasonally adjusted reading of 3.2% with costs for shelter and gasoline taking much of the blame for the sequential monthly rise.
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