Key Highlights

  • Inflation accelerated in January, with vehicle prices, parts, and insurance contributing strongly to the gains.
  • Retail sales experienced a notable decline in January, with the auto sector underperforming the broader market.
  • Consumer credit excluding mortgages saw a record increase in December, while auto loan performance showed mixed results.

Inflation Trends

Inflation accelerated in January, with vehicle prices, parts, and insurance contributing strongly to the gains as year-over-year inflation increased to 3.0% and core inflation increased to 3.3% year over year.

  • Headline inflation, according to the Consumer Price Index (CPI), rose by 0.5% in January, surpassing expectations.
  • Core CPI, which excludes food and energy, increased by 0.4%.
  • Used vehicle prices surged by 2.2%, following a 0.8% gain in December.
  • Motor vehicle parts saw an increase of 0.8%, up from 0.1% in December.
  • Motor vehicle insurance jumped 2%, compared to a 0.5% rise in December.
  • Year over year, core CPI increased to 3.3% from 3.2%, while overall CPI rose to 3.0% from 2.9% in December.

Retail Sales Performance

Retail sales declined 0.9% in January, as most categories declined, with winter weather playing a role. Vehicle sales underperformed the market.

  • Retail sales fell by 0.9% in January, following a 0.7% gain in December.
  • Sales of motor vehicles and parts declined by 2.8%.
  • Eight of the twelve major retail categories saw sales decline for the month.
  • Gas stations and food service and drinking places recorded the largest gains at 0.9% each.
  • Sporting goods, hobby, book and music stores experienced the largest monthly decline at 4.6%.
  • Year over year, retail sales were up 4.2%, down from a 4.4% increase in December.

Consumer Credit and Auto Loan Trends

Consumer credit excluding mortgages saw a record increase in December, while auto loan performance showed mixed results.

  • Consumer credit expanded by $40.85 billion in December, following a $5.37 billion decline in November.
  • Revolving credit jumped by $22.86 billion, while nonrevolving credit increased by $17.99 billion.
  • Access to auto credit was unchanged in aggregate in January, but channel trends were positive, and trends by lender type were more mixed, according to the Dealertrack Credit Availability Index.
  • Subprime share increased, terms lengthened, negative equity rose, and down payments declined slightly.
  • Approval rates declined, and yield spreads widened, negating some positive factors.
  • Auto loan performance had been stabilizing to improving at year-end, but performance generally declined in January, which is typical for the time of the year.
  • Severe delinquencies increased to 2.11% in January, up from 2.02% in December.
  • Defaults increased by 2.2% in January and were up 2.6% year over year.