The industry measure of “average transaction price” indicates how much money consumers spent on average per new vehicle, a function of price increases and a greater percentage of high-dollar vehicles in the mix. Prices of new vehicles have soared over the years. New and used vehicles account for 16% of the CPI for durable goods. New and used vehicles and “hedonic quality adjustments.” The decline was in part due to aggressive “hedonic quality adjustments” – we’ll get to those in a moment – which remove the costs of quality improvements from the CPI. The ironic element here is that CPI for durable goods declined for much of the past 20 years though new cars and used cars and smartphones and a million other things have gotten more expensive. In January, it was up by 3.5% from a year ago The past three months have been the steepest year-over-year increases since 1995. The CPI for durable goods (black line) has spiked in recent months on a year-over-year basis amid a surge in demand for some durable goods.
In January, the CPI for nondurable goods was up 0.7% from a year ago, after having been down 3.6% year-over-year in May. Energy prices, such as gasoline, plunged in earlier in 2020 as demand collapsed, but started to rise months ago. The CPI for nondurable goods (green line) is driven by the volatile categories of food and energy. For example, in January, year-over-year, the CPI for: The CPI for services (red line) – everything from rent to airfares – increased mostly between 2% and 3% year-over-year for the last decade, but dropped during the Pandemic as demand for services such as hotels, flights, and cruises collapsed. And all these products fall into three categories: durable goods (black line), nondurable goods (green line), and services (red line), with services accounting for 60% of the overall CPI. The overall CPI for urban consumers, the politically correct way of expressing the decline in the purchasing power of the dollar, rose 1.4% in January, compared to a year earlier.Įach product that is in the basket of consumer goods tracked by the CPI has its own specific CPI. Inflation in durable goods, non-durable goods, and services.