A Sign of Inflation Coming Down the Road

To understand why it's so hard to get a handle on inflation, take a look at car prices in the US today. Used-vehicle prices are dropping at the fastest pace in decades, and the cost of a new car is still skyrocketing.

- By Lisa Abramowicz

How can this be? The simplest explanation is that used-car prices went bonkers last year because there was so little inventory and there's now a long way to fall. The more disturbing reason is the classic story of two Americas: Wealthier families have a lot of money saved, and they're willing to pay a premium to get a bigger, fancier new car. Over the past 18 months, almost every new vehicle was either presold or sold at full sticker price within a week of delivery, according to Cox Automotive.