Bryan Kuderna: What Is Inflation Still Sticking To?

While inflation has been on the forefront of consumers and investors for the past two years, it’s heading down. The numbers through May slowed to 4 percent year-over-year from nearly 10 percent at their peak. However, there are signs that inflation may be “sticky” in some areas.

That may keep overall inflation higher for longer. And it may also mean the Federal Reserve has to keep interest rates high, which could curb future economic growth.

For the Federal Reserve, consumer price inflation isn’t the preferred metric. Rather, it’s inflation with food, energy, and shelter stripped out.

So even with housing prices finally starting to dip on a year-over-year basis, there’s a long way to go.

Inflation remains high, and therefore sticky, in other key areas, notably transportation-related expenses.

For instance, auto insurance premiums have risen by an average 17.1 percent year-over-year. That’s partially due to inflation. But the lack of replacement parts and vehicles from supply chain issues have driven that prices up.

Higher parts and labor costs have also led to a jump in auto repair prices. They’ve logged a 13.5 percent rise year-over-year.

Finally, auto leases have soared. That’s due to rising interest rates. If they remain higher for longer, the cost of leasing a vehicle will remain high as well.

For investors, the inflation data shows that there’s still rising prices in the automotive market, even as used car prices have dropped. Investors may fare well in auto repair store or replacement parts companies if inflation here remains high.

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