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Globe says BMO economist sees car inflation taking off

2021-07-30 07:46 ET - In the News

The Globe and Mail reports in its Friday edition that Canada's national statistical agency does not track inflation in the used-car market, missing what has been a volatile aspect of U.S. price pressure in recent months. The Globe's Matt Lundy writes that the car market has been roiled by a global shortage of computer chips that has weighed on vehicle production, driving demand to used cars that are also in short supply. According to the U.S. Labour Department, the price of used cars and trucks in the United States jumped 10.5 per cent in June alone, and by 45 per cent over the past year, leaving an outsized footprint on overall inflation. In some instances, lightly used vehicles are selling for more than their original purchase price. Dealerships say dynamics are similar in Canada, but there is no accounting of that in the consumer price index. "If the goal of inflation is to capture the broad movement of prices, that's one piece of the story we're missing right now in Canada," said Erik Johnson, an economist at Bank of Montreal. While Statistics Canada does not track car prices, the average price of used vehicles listed on Autotrader's website was $28,322 in June, up 9.5 per cent from a year earlier.

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