There’s no relief in sight for U.S. car owners who’ve faced soaring costs of maintaining a vehicle in the past two years. According to the Bureau of Labor Statistics, prices of motor-vehicle insurance rose 20.3% in December from a year earlier, marking the largest jump since 1976. That was the 16th straight month of annual gains exceeding 10%. Experts at Bloomberg Intelligence have also indicated that insurance rates will likely continue to rise, driven by higher costs of replacement parts and repairs in the automotive market.
While the prices of used cars and trucks have lowered from their peaks two years ago, the December consumer-price index released indicates an uptick in used-vehicle costs from the previous month, defying economists’ forecasts for a decline. This surprise monthly increase in that category has been among the main drivers of an acceleration in the overall rate of inflation. Used-vehicle prices remain up 38% since the start of the pandemic, despite a drop in 2023.
On the other hand, new car and truck prices are not increasing nearly as much as they did in 2022, with just a 1% increase in December on an annual basis. This indicates that while the automotive market continues to face challenges due to the rising costs, new vehicle prices are stabilizing to an extent. The combination of these factors poses significant challenges to car owners in the U.S. and shows no signs of slowing down. Hence, car owners must be proactive in managing their vehicle expenses and exploring ways to mitigate the impact of rising costs.
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