Price of Used Cars Drops 0.7 Percent, First Time Since Cash for Clunkers

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Written by David Rosnick   
Friday, 15 October 2010 10:23
Even as the Consumer Price Index rose 0.1 percent in September, the price of used cars actually fell 0.7 percent — the first time it has experienced such a fall since leading up to the beginning of the cash-for-clunkers program last summer. While it's only a single month of data, the drop might signal the end of the tight supply of used cars resulting from the program, which removed nearly 700,000 used vehicles from service. The acceleration and deceleration in prices resulting from cash for clunkers can be seen in this Graphic Economics post. Even with the rapid rise in prices over the last 17 months (19.2 percent), the price of used cars remains 9.5 percent below the 2001 peak.

Over the last three months, overall prices have grown at a 2.7 percent annualized rate.  The core CPI remained unchanged over the month and has now grown at a 0.7 percent annualized rate since June. Major price categories have seen decelerating prices over the last three months, including housing and transportation, but inflation in recreation, education and communication, and other goods have also fallen in recent months.

For more information, read the full Prices Byte.