3 things that saw highest price increases last month

Wed, May 12, 2021, 9:45 AM 4 min read

One of the most anticipated data drops for inflation watch 2021 came out Wednesday as the Bureau of Labor Statistics released its Consumer Price Index for April, showing the biggest gains in over a decade, jumping 0.8% compared to March 2021.

The CPI climbed 4.2% in April from a year earlier, up from 2.6% for the year ended in March.

Supply shortages due to the pandemic and unleashed consumer demand as vaccinations ramp up are largely the reason for these changes, conditions that the Federal Reserve considers transitory as things readjust.

Looking into the data shows many categories that increased in price a bit, and a few items that have an outsized impact. Here are the top three.

Used cars and trucks

Prices for used cars and trucks jumped 10.0% in April, a staggering number.

“This was the largest one-month increase since the series began in 1953, and it accounted for over a third of the seasonally adjusted all items increase,” the BLS noted in the release.

Compared to April 2020, the increase is a whopping 21.0%. (New vehicles prices rose 0.5%.)

In this aerial photo, mid-sized pickup trucks and full-size vans are seen in a parking lot outside a General Motors assembly plant where they are produced Wednesday, March 24, 2021, in Wentzville, Mo. The global shortage of semiconductors is forcing General Motors to further cut production at six North American factories as chip supplies seem to be growing tighter. The shutdowns likely will crimp dealer inventory of vehicles made at the plants, but GM says it has managed to keep factories humming that make hot-selling and profitable full-size pickup trucks and SUVs. (AP Photo/Jeff Roberson) — Mid-sized pickup trucks and full-size vans are seen in a parking lot outside a General Motors assembly plant where they are produced March 24, 2021, in Wentzville, Mo. The global shortage of semiconductors is forcing General Motors to further cut production at six North American factories as chip supplies seem to be growing tighter. (AP Photo/Jeff Roberson) · ASSOCIATED PRESS

"In terms of auto prices, we think the recent run-up is related to production issues limiting supply and that once supply chain issues are eventually resolved, prices could move down," JPMorgan’s Daniel Silver wrote in a note Wednesday discussing the inflation metrics. “The recent surge, which will probably continue in May, but is unlikely to be the start of trend, appears to be due in part at least to fallout from the semiconductor shortage.”

Chip shortages are hurting new vehicle production, thus boosting the used-car market — which rental car companies are also tapping.

Airlines

Airline fares rose 10.2% since March and are up 9.6% compared to 12 months ago, as the reopening continues and travel resumes.

Car rental and lodging away from home

Prices for lodging away from home rose 7.6% and car and truck rentals surged 16.2% — the latter of which constitutes an 82.2% increase compared to April 2020. Part of the car-rental cost story comes from the auto supply issues, JPMorgan noted. With supply for cars tight, car-rental prices follow in lockstep.

Rental vehicles are parked outside a closed Hertz car rental office Saturday, May 23, 2020, in south Denver. (AP Photo/David Zalubowski) · ASSOCIATED PRESS

What this means going forward

The fact that the biggest surges have to do with travel and transportation, categories specifically related to reopening post-pandemic, is an important one.

“The month-to-month rise in core prices was led by travel-related parts in particular, consistent with it being downplayed as ‘transitory’ by Fed officials,” JPMorgan’s Silver wrote.