New government research shows that markups on new vehicles helped drive the inflation plaguing consumers.
A recent study by the U.S. Bureau of Labor Statistics (BLS) shows that those added profits contributed 0.3 to 0.7 percentage points to the almost 16% increase in the Consumer Price Index (CPI) between the close of 2019 and the end of 2022.
Demand for new cars surged once consumers received pandemic stimulus checks. At the same time, the pandemic hamstrung supply chains, leading to lower supplies and higher new car prices. The BLS says much of that added money went to car dealers.
“It was really from famine to feast for dealers,” Michael Havlin, the economist who wrote the BLS paper, told The Wall Street Journal (WSJ) in an interview published Sunday (April 23).
A spokesperson for the National Automobile Dealers Association argued that the idea that dealers contributed to inflation was "absurd."
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