This edition of the Auto Market Weekly Summary includes updates on consumer prices, producer prices, credit availability, and consumer credit. The dominant story remains energy prices, and even with the makings of a resolution to the Middle East now in place, the effects on inflation and consumer purchasing power will likely be felt through much of the remainder of 2026.

Bottom Line Up Front

This week delivered another read on inflation pass-through from the energy shock, as both consumer and producer prices accelerated to multi-year highs. But composition matters more than magnitude: This is an energy-driven supply shock, not a broad-based demand problem. Gasoline alone rose 7% at the consumer level and 23.4% at the producer level, accounting for the bulk of both increases, while the core Consumer Price Index (CPI) advanced just 0.2% and underlying pressures stayed contained. For Chairman Warsh’s Fed, that distinction matters, as central banks typically look through supply-driven inflation. But with one-year expectations elevated and core Personal Consumption Expenditures (PCE) near 3%, the margin for patience is thinning.

For the auto market, the credit data offered a deceptively constructive headline. The Dealertrack Credit Availability Index climbed to its highest level since April 2022, but the drivers complicate the read. The index advanced primarily on yield spread compression — a 53 basis point narrowing as rates eased across credit tiers — while a continued decline in subprime share was the largest drag for the second straight month. Beneath the improvement: Loan terms hit a new all-time high, negative equity remains up year over year, and down payments continue to run below year-ago levels. Access to credit is improving largely because lenders and borrowers are taking on more risk.

The harder issue now is how to gauge the energy-shock inflation waiting in the pipeline. The producer data suggests more passthrough ahead. Transportation and warehousing prices are now up 14.2% year over year, which typically feeds downstream into product and distribution costs. Trade margins fell 1.1% though, suggesting wholesalers and retailers are absorbing part of the shock rather than passing it through. The consumer credit data reinforces the strain. Households leaned further into revolving credit, which expanded at a 10.4% annualized rate even as card standards remained tight.

For dealers, the takeaway heading into summer is that inflation is now firmly in the rate conversation. The Fed retains room to wait, but the diesel passthrough, elevated inflation expectations, and a consumer increasingly reliant on credit all argue against near-term relief on financing costs. Until energy prices normalize, the Fed will be in a tight spot. The first Warsh-led Fed meeting is later this week. It will be important to hear what the discussions are in the room to gain clues on the path of interest rate policy for the remainder of 2026.

Consumer Price Inflation

Headline inflation accelerated in May, driven primarily by energy prices. Underlying price pressures remained relatively contained.

  • The CPI rose 0.5% month over month, in line with consensus, lifting the year-over-year rate from 3.8% in April to 4.2% May.
  • Energy was the dominant driver, rising 3.9% on the month and accounting for more than half of the total increase.
  • Gasoline prices rose 7% in May and are up 40.5% year over year.
  • Food inflation was mild, with the food-at-home index up just 0.1% on the month, and now higher by 2.7% year over year.
  • Core CPI (excluding food and energy) rose 0.2%, slightly below consensus of 0.3%. The year-over-year rate increased slightly, from 2.8% to 2.9%.

Producer Price Inflation

Producer prices rose sharply in May, matching April’s pace but with a twist. While April’s surge was led by services, May’s was an energy and goods shock, with gasoline and diesel doing nearly all the work while services decelerated.

  • The final demand index rose 1.1% in May, matching April’s revised pace and above market expectations of 0.7%. Roughly 80% of the gain came from final demand goods, which jumped 2.8%. This was the largest monthly increase since the series began in December 2009.
  • Services rose just 0.3%, down from 0.7% in April.
  • Unadjusted, producer prices are now up 6.5% year over year, the largest 12-month advance since November 2022.
  • Energy was again the primary driver, with final demand energy up 10.7% after gaining 7.5% in April. Gasoline accounted for over half the goods increase, surging 23.4% month over month, with diesel, jet fuel, and industrial chemicals also rising.
  • Transportation and warehousing prices, which typically feeds downstream product and distribution costs, jumped 2.6% in the month and is now up 14.2% year over year.
  • Underlying inflation (less foods, energy, and trade) firmed, but did not surprise to the upside, rising 0.8% for the month and lifting the 12-month rate to 5.1%.

Credit Availability

Auto credit access rose notably in May, with the Dealertrack Credit Availability Index climbing to its highest level since April 2022.

  • Among channels, all segments improved month over month, led by Independent Used and All Used. Among lender types, Credit Unions were the only lender to improve while Banks were essentially flat and Captives and Finance Companies declined, even with the overall index advancing.
  • The yield spread narrowed 53 bps on the back of modest rate declines across credit tiers and a shift in loan mix, accounting for the majority of the gains.
  • Approval rates improved, adding further support as the second largest contributor.
  • A continued decline in subprime share acted as the primary drag for the second consecutive month.
  • Risk indicators remained elevated. Loan terms continued to grow, reaching a new all-time high of 30% for loans exceeding 72 months; negative equity eased modestly from April but remains up 250 bps year over year; and down payments continued to run about 60 bps below year-ago levels.

Consumer Credit

Consumer credit expanded solidly in April, furthering a run of stronger-than-expected growth even as the outlook for the coming months grows more cautious.

  • Total consumer credit outstanding rose $20.7 billion in April, a modest step down from the $22.3 billion gain in March, with the annualized growth rate coming in at 4.8%.
  • Revolving credit – which includes credit cards – led the increase, adding $11.6 billion at an annualized rate of 10.4%.
  • Nonrevolving credit grew $9.1 billion at an annualized rate of 2.9%, slowing from 3.8% in March, coinciding with a modest dip in vehicle sales during the month.