Used car prices skyrocket as UK inflation eases
The UK average price of a used car has increased by 23.9 per cent this week as a result of September’s inflation rates easing to 3.1 per cent.
Data from automotive advertising firm Auto Trader have also revealed that year-on-year prices quadrupled this week, especially if compared with the 5.7 growth recorded in the week of 12 April when physical forecourts reopened.
The record price growth was mainly fuelled by the increase in consumer demand which was up 19 per cent compared with pre-pandemic levels, Auto Trader explained. Stronger consumer demand was also seen in the 17 per cent increase in the speed at which retailers sold cars this week.
A 12 per cent drop in prices compared with 2019 levels and a shortage of micro-chips and raw materials are also considered important factors, as they impacted the global supply of new cars.
“With levels of used car price growth once again smashing previous records, there is a lot of speculation around how long this boom could last,” said Auto Trader’s data and insights director Richard Walker.
“Whilst inflation in itself does pose a potential risk to consumer demand, we don’t expect to see price growth slow anytime soon.
“This is based on the continued acceleration we’re tracking across the market – fuelled, in part, by increased levels of household savings, a positive sentiment shift towards car ownership, and the 1.5 million ‘lost’ transactions last year – coupled with the ongoing shortage in both new and used car supply.”
Inflation slowed unexpectedly in September, with restaurants and hotels making the largest downward contribution to the change in rates. Morning Wire reported that this was because the UK Government’s Eat Out to Help Out scheme of August 2020 dropped out of the annual comparison.
The Bank of England – which is set to tackle the acceleration by hiking interest rates – said last month it expected inflation to rise above 4 per cent in the last few months of 2021.