Car prices have risen by 63.7% since the start of the pandemic, new figures show.
Factors causing the spike include Brexit, pandemic-induced global shortages and the war in Ukraine.
Economist Tom Gillespie told Breakfast Briefing this morning: “Since the start of the pandemic we’ve had prices grow by 6% each quarter.”
“If you look at the two years before the pandemic, the average quarterly inflation was about 0.8%.”
Meanwhile, mid-range cars have depreciated less in the past two years.
For example, in July 2021 a 2008 Audi A4 would have sold at an average price of €10,500. Buyers could now expect to pay €12,129 for the same car.
There are signs of the spike stabilising however, with average inflation dropping to 4% in the last quarter.
“The overall average kind of masks what is happening on both ends of the market”, said Gillespie.
“On the lower end of the market [inflation] is still rising quite sharply, but the upper end of the market - the cars that are about €20,000 and above - are slowing down to 1.5%.”
High demand has caused inflation in used electric vehicles to reach 6.6% - meaning EV owners will now have the upper hand if they choose to trade in.
In response to the new figures, online marketplace DoneDeal said: “If the car market can be thought of as a sign of things to come, then it surely acted as the canary in the coalmine for inflation in the wider economy.”
Mid-range and high-end combustion engine vehicle prices are expected to stabilise in the coming months, but the lower end of the market will continue to suffer supply shortages.
Low-income drivers are expected to be hit the hardest by this new development in the cost of living crisis.
Main image shows cars driving bumper to bumper.