Buying a car in the United States of America is costing more and more each month. The average car price in the U.S. leaped past $40,000 last December and continued to rise in 2021 to an average of $45,000 in September, a 12.5% rise in nine months and the sixth-consecutive month that the price has increased.
The overall number of cars sold in September declined by 7.3% compared to the record in August. The decline marked September 2021 as one of the worst-performing months in terms of sales volume for the last decade.
The rising price does not stop with new cars. In September, the average price of used cars went up from approx. 22,000 in 2020 to $24,500-$28,000.
The semiconductor crisis continued to weigh down on the auto market as a shortage of computer chips and supply shortage from production cut during pandemic outbreak caused delay in production and a falling dealer inventory. Meanwhile, demand for high-end technology and interest in SUVs or trucks are also the reasons for rising car prices as well.
New cars and used cars and trucks accounted for more than 7% of the U.S. CPI, which is quite high considering energy also accounted for around 7%.
As one of the contributors to the U.S. CPI, car price is expected to extend further amid forecast of 5.7% inflation rate for October by economists, a leap from 5.4% in September. Official report for October CPI will be later today (Wednesday).
The U.S. Federal Reserve (Fed) expects a spike in inflation will be extended into 2022, but will be temporary. The central bank will adjust open market purchases of treasuries to $70 billion per month of treasuries and $35 billion per month of mortgage-backed securities in November. For December, the Fed will adjust open market purchases of treasuries to $60 billion per month of treasuries, $30 billion per month of mortgage-backed securities.
In addition, the Fed predicted that inflation will fall by 2 or 3 percentage points in the next quarter, but the timing of inflation easing is highly unknown, although it is expected in the second or third quarters of next year.