Rising used car prices drive up UK inflation

Growing demand for secondhand cars has seen UK inflation climb to 0.5 percent in September 2020 according to the Office of National Statistics

Used car forecourt

Growing demand for used cars has helped push up the UK inflation rate to 0.5 percent in September, up from 0.2 percent in August.

The Office of National Statistics says rising transport costs made the largest upwards contribution of 0.23 percentage points.

A rise in restaurant and café prices following the end of the Eat Out to Help Out scheme also contributed to the rise in the Consumer Prices Index.

Transport costs grew for the first time since March 2020, which the ONS says is a result of a larger contribution from the purchase of secondhand cars.

“Prices have potentially been boosted by increased demand as people reportedly look to reduce their reliance on public transport.”

Auto Trader has reported used car prices have risen consistently since the ending of lockdown restrictions.

Last month, the new and used car marketplace recorded the largest monthly price rise increase ever.

Richard Walker, Auto Trader data and Insight director, explained: “Used car prices have been fuelled largely by the imbalance of supply and demand dynamics in the market.

“This demand is set to continue, driven, in part, by the growing aversion to public transport, which our research shows has increased to its highest point since we began tracking it at the beginning of the summer.

“So, whilst the rate of growth will likely begin to ease in line with typical seasonal trends, we don’t foresee any imminent factors which will significantly affect car prices during the remaining months of the year.”

Car retailer trade body the NFDA said an increase in disposable income for a number of consumers could also be helping drive robust used car demand.

Average petrol prices did rise slightly in September 2020, to 113.3p a litre, but this was still well below the 127.3p a litre recorded in September 2019.

Diesel stands at 118.2p compared to 131.8p in 2019.

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Richard Aucockhttps://www.motoringresearch.com/
Richard is director at Motoring Research. He has been with us since 2001, and has been a motoring journalist even longer. He won the IMCO Motoring Writer of the Future Award in 1996 and the acclaimed Sir William Lyons Award in 1998. Both awards are run by the Guild of Motoring Writers and Richard is currently chairman of the world's largest organisation for automotive media professionals. Richard is also a juror for World Car Awards and the UK juror for the AUTOBEST awards.

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