Inflation is easing — but car repair costs aren’t: report
- Consumer prices rose at a slower pace from August to September
- New report by Minneapolis Fed says relief hasn't quite hit car owners yet
- A majority of people surveyed said car repairs are top financial concern
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(NewsNation) — Inflation is continuing to show signs of easing, but that hasn’t been seen when it comes to car repairs, a news report says.
Car repair costs are 17% higher than they were last year, according to the Federal Reserve Bank of Minneapolis, while the cost of maintenance also saw an increase of 9% over the same period.
There are a combination of “long-term factors and recent shocks to the economy” that the bank attributes to this.
One is COVID-19. Supply chain disruptions and production constraints stemming from the pandemic greatly limited how many new vehicles were entering the market, causing them to become much more expensive. Vehicle parts were also harder to find at this time.
Used car sales then skyrocketed after 2020, so more people held on to vehicles they already had, leading to a record high for the average age of vehicles on the road this year.
Older cars need more repairs, Linden Wicklund, executive director of the Alliance of Automotive Service Providers of Minnesota, noted in the Minneapolis Fed’s report, meaning there was higher demand for these services.
Another reason for these high car repair prices? Advancing technology.
“Cars these days are rolling computers,” Wicklund said, according to the report. “If you’re fixing something that’s more complex, they’re going to need to keep it in the shop for longer, which gets more expensive.”
Tight labor market conditions in recent years because of an aging workforce, and typically lower pay, haven’t helped matters. Repair shop owners say employee shortages are affecting their ability to take on more work.
“We are taking less appointments this year due to lack of help,” one auto repair shop owner said in the report.
Respondents to the Minneapolis Fed Survey say vehicle repair and maintenance costs put more stress on their budgets than any other. About 34% of those surveyed said their car repairs are their top financial concern, compared to 29% who said the same about their rent or mortgage.