Why car prices are keeping pressure on high inflation.

Car prices have helped push inflation sharply higher over the past year, and economists have been counting on them to level off and even decline in 2022, allowing the rising Consumer Price Index to moderate markedly.

But dealerships are wrestling with inventory shortages — the result of a dearth of computer chips, production disruptions and other supply chain snarls. That’s not a problem just for car buyers, who are paying more; it’s also a problem for economic policymakers as they try to wrestle the fastest inflation in four decades under control, Jeanna Smialek reports in The New York Times.

And it is increasingly unclear how much and how quickly car prices will slow their ascent, because of repeated setbacks that threaten to keep the market under pressure. While price increases are showing some early signs of slowing, and used car costs in particular are unlikely to climb at the same breakneck pace as last year, continued shortfalls of new vehicles could keep prices elevated — even rising — longer than many economists expected.

“If I could get 100 Toyotas today, I would sell 100 Toyotas today,” said Corina Diehl, a dealership owner in the Pittsburgh area. Instead, she said, she’s lucky to have three. “It’s the same with every brand I have.” READ THE FULL ARTICLE →

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