We got more data on Thursday that confirms what we all see pretty much every day: prices continue to rise for all sorts of things.
In January, the Consumer Price Index – which tracks the cost of a range of things people spend money on, including food, shelter, clothing, health care, energy, transport – was 7.5% higher than the same period last year.
It’s the biggest increase in 40 years, and it’s not just goods that are getting more expensive.
For example, car insurance premiums are also increasing, by more than 10% in some cases. This also comes on top of rising car and gas prices.
There was a time, early in the pandemic, when car insurance companies were actually refunding money to their customers.
“The number of miles traveled really drastically dropped for a short time, which led to a lot less accidents on the roads and things like that,” said Bob Passmore of the American Property Casualty Insurance Association.
All of this has reduced costs for insurance companies, he said. But now people are driving again. “Today we’re pretty close to where we were at this point in 2019.”
And those savings are over. Everything related to cars is getting more and more expensive, said Jeffery Williams, principal analyst at Forrester Research.
“Look at the new car market – cars are more expensive. Look at the used car market – cars are more expensive,” he said. “If you already have a car, if you go out and buy new mats to go in the car, they’re going to cost more.”
All of this means that the value of the cars that companies insure increases. The same goes for the cost of car repairs, as well as medical care when people have accidents.
“And those costs are passed on to the consumer,” Williams said.
To raise rates, auto insurance companies must seek permission from state regulators, and they got it.
“I’ve seen premium increases in the range of 5%, 10% and even 15%,” said Doug Heller of the nonprofit Consumer Federation of America. Rate hikes drive up the already high cost of owning a car.
“It throws a huge wrench in the budget of people who are really struggling to get by,” he said. And many of them need these cars to get to work.