U.S. inflation has eased to its lowest rate in three years, signaling potential relief for consumers and policymakers.
While the U.S. consumer price index (CPI) rose again in August, it recorded the smallest year-over-year increase since January 2021. According to the Bureau of Labor Statistics (BLS), the CPI rose 2.5% in August compared to the same month a year ago, down from July’s year-over-year increase of 2.9%.
Core CPI, which excludes volatile food and energy prices, saw a slight uptick of 0.3% against forecasts of 0.2%, and a year-over-year rise of 3.2%.
Key indices reported varied movements: the food index edged up by 0.1% after a more robust increase in previous months, and the energy index fell by 0.8%, helping to moderate overall inflation. Housing costs continued to rise, with the shelter index increasing by 0.5% and rent indices showing continued growth.
Auto Insurance Still Rising, Car Prices Coming Down
In the automotive sector, auto insurance is among the indexes that increased -- 16.5%, the highest reported year-over-year increase in any category in August 2024.
Those in the market for a new or used car received better news. The used car and truck index decreased 10.4% since August 2023, and while the CPI showed the new car price index stayed steady, Kelley Blue Book data reported transaction prices for new cars fell year over year, while incentives reached their highest levels since early 2021.
In August, the average transaction price (ATP) stood at $47,870, down 0.6% from July’s revised figure of $48,166, as higher inventory levels continued to push prices down.
Incentive levels also surged in August, averaging 7.2% of the ATP, a notable increase from 7.0% in July and 4.8% in August 2023.
Stellantis brands like Chrysler, Ram and Jeep saw some of the biggest shifts, moving from below industry-average incentives in July to above-average levels in August. On the other hand, incentives for Dodge vehicles fell, from 6.9% to 5.6%.
EVs also saw substantial incentive growth, with August levels reaching 13.3% of ATP, the highest point of the year. While EV prices have remained relatively stable month over month, incentives on electric vehicles were more than 80% higher than those for traditional internal combustion engine (ICE) models.
As new-vehicle inventories climbed more than 40% compared to last year, consumers had more choices and enjoyed greater discounts. Brands such as Porsche, Land Rover and Lexus continued to offer the lowest incentives, while Buick, Lincoln and Mitsubishi posted higher-than-average discounts. Meanwhile, popular segments like compact SUVs saw incentives averaging 9.2% of ATP, and full-size pickups hit 8.4% of ATP.
With dealers leveraging higher incentives to combat sluggish sales, the trend toward lower vehicle prices is expected to continue in the coming months, particularly as consumers seek better deals in a tightening economic climate.
