US auto claims severity back on the rise; policy inflation hits 15%
US motor insurance policy inflation rose again in March, up to a 15.0% annual pace just as cost inflation for auto appeared to have regained a measure of traction, the latest inflation reading from the US Bureau of Labor Statistics (BLS) has indicated.
Motor vehicle policy costs rose 1.2% for the month to render the 15% annual rate, what would be an all-time record were it not for the May 2021 jolt from 2020 pandemic rebates. Annual readings hit double digits in September 2022 after a low recorded at the turn of 2021/2022 in what has been a nearly uninterrupted upwards march.
Select severity measures were mixed in the March reading, taking a bit of the hope out of prior month's clearer signs of outright auto parts and repair disinflation.
Motor vehicle repair costs rose 0.2% for the month, sufficiently mild to take the annual inflation reading down 0.3 points to a still-strong 17.4%. Those costs had risen over 7% in just the three months to a 23% annual inflation rate in January prior to an easing in February.
But parts and equipment cost inflation ticked up in March to a 6.4% annual reading after a nine month easing of annual readings.
Replacement costs in the form of used vehicle prices show signs of stabilizing month to month in the ongoing take down from pandemic-era price madness.
Tenants’ and household insurance, left seasonally unadjusted by BLS, has remained comparatively stable despite a parallel run up in construction and repair costs. Mark the annual policy inflation rate at 0.9% in March to roughly match YTD readings, a fractional gain from levels seen throughout end-2022.
The broad measure of US consumer inflation came down a full notch to a 5.0% annual pace in March, the lowest reading since May 2021 and 3.9 percentage points below the peak from mid-2022.
BLS authors called out shelter costs as “by far the largest contributor” to the month on month gain in the headline reading, more than offsetting a decline in energy prices.
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