I suspect the reason is that a car's parts are numerous, and because specific inflation affects different components, there's a good chance that a car's component has more inflation than other products in the economy.
And because inflation has an expectation driven aspect, suppliers that know inflation is happening is going to raise their prices more to combat it pre-emtively. This happens throughout the entire supply chain.
Thus, the end result is that a car's inflationary pressure is higher.
But that's just a theory - an inflation theory...
Personally, I think the way it makes the most sense is thinking of inflation as the change in the value of money rather than the change in the cost of goods, in large part because costs rise for non-goods too. For example, my employer pays me more today than they did in 2019 despite my employer not selling any goods or buying many goods outside of laptops for their employees and they obviously don't care about my personal expenses when determining annual raises.
New cars make up about 4% of the CPI, and used cars around 3%, so together they’re only a small part of the inflation basket. If new car prices doubled tomorrow and nothing else changed, headline inflation would rise by about 4%, but car prices would have increased 92% relative to inflation.
Inflation measures the decline in the value of money over time. If car prices rise significantly more or less than that decline can explain, that’s meaningful. If they don't... that's not.
Energy costs going up, raw materials costs going up, employees asking for raises because of the higher cost of living... And you have an explanation not just for cars but all industries.
Inflation is always the main contribution to price increase. It only makes sense to compare price raise above or below inflation if you want to unearth factors specific to any given product or industry.
It is fundamentally different to ask whether cars cost more because money is worth less, or whether cars cost more because we are making them less efficiently.
The ancestor comment points out that most of the change can be attributed to the former and as cars are only a small percentage of the inflation basket then it is reasonable to conclude that this is indeed the prime reason for the price rise.
The fundamentals of civilization would be a lot clearer if we measured the value of things in energy instead of a floating currency.
So even though inflation may feed into that stuff, there's plenty of causality to inspect. Why aren't there cheaper cars? Not because there's more money, but because nobody decided to make and sell a cheaper car. That's the stuff that we should be asking about. Not waving our hands and saying 'sucks, inflation'. The inflation happens at the speed it does because of things like this.
The reason may well be: who would sell a car, or a car part, or their labor, for less when there's so much money going around? But we can still ask plenty of questions about that. Cause I'm pretty damn sure the labor isn't raking in the difference at a rate matching inflation. And it sure seems like there's plenty of room to compete on price, so if no one's doing that effectively, why not?
Yes. But the most common reason for setting up higher price is because you can, because there's more money flowing in the economy than it should be. Going into details is in the grand scheme of things about as useful as rearranging chairs on the Titanic.
> Why aren't there cheaper cars? Not because there's more money, but because nobody decided to make and sell a cheaper car. That's the stuff that we should be asking about.
Yes. But we should be asking why cars are 3% more expensive, because their prices rose by 29% while the inflation is "only" 26% (don't remember exact numbers), not why car prices rose 29%. If you don't deduct inflation you are interested in wrong things because large numbers make you think there's a drastic reason.
Does 3% even deserve and explanation? Isn't it fully explained by toxic advertising making consumer want heavier car year after year, that naturally cost more?
Money supply always changes. But yes, inflation is possible without changing money supply, if for example economy shrinks or there's some process that reactivated dormant capital that people had just sitting around and not being used by the economy.
In the end it's always the same thing. More money than it should be. It's just that "should be" is very complex and "more money" only a little bit simpler.