Surging auto insurance costs are fueling higher inflation
Former Assistant Treasury Secretary Monica Crowley discusses the strain inflation is having on the middle and lower class on 'The Bottom Line.'
Surging auto insurance premiums are fanning the flames of high inflation and keeping the financial pressure on millions of U.S. households nationwide.
Consumer prices rose 0.3% in January from the previous month and climbed 3.1% from the same time last year, the Labor Department reported Tuesday. Both of those figures came in higher than the 0.2% monthly increase and 2.9% headline figure forecast by Refinitiv economists.
Many of the usual culprits – including rent and groceries – were to blame for the hotter-than-expected reading. But a surprise uptick in insurance prices also made a notable contribution last month.
The cost of auto insurance jumped 1.4% in January, bringing the total annual gain to 20.6% – the fastest annual rate on record. When compared with early 2019, motor vehicle insurance is nearly 40% more expensive. Experts say the problem could soon get worse before it begins to improve.
HIGH INFLATION IS STILL SQUEEZING AMERICANS' BUDGETS
An American flag is placed at a gas station on June 11, 2022, in Woodbridge, New Jersey. ((Photo by Kena Betancur/VIEWpress) / Getty Images)
«New- and used-vehicle prices have moderated as dealer lots fill up. Insurance companies, however, are still playing catch-up,» said Matt Colyar, a Moody's Analytics economist. «Rapid as the increase in insurance costs has been, motor vehicle repair costs are up by even more over that period, suggesting the CPI for motor vehicle insurance has further to rise.»
In 2023, the average U.S. rate for full auto insurance surged to $2,019, a 24% increase from $1,633 in 2022 and a nearly 29% jump from
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