America’s inflation scare becomes less menacing

THE USED-CAR salesman occupies a distinctive, if rather unflattering, place in American culture. In “The Grapes of Wrath”, John Steinbeck’s classic novel set in the Depression, sleazy salesmen prey on miserable farmers. “Cadillac Man”, a film from 1990, features a fast-talking merchant with a bevy of mistresses. These depictions, and many others, are unfair to most of the hard-working types on car lots. But in recent months such salesmen have occupied a distinctive and unflattering place in America’s economy, as avatars of worryingly rapid inflation.

When consumer prices rose by 5.4% in June compared with a year earlier, the fastest pace since 2008, used cars accounted for a third of the pickup. So analysts are paying unusually close attention to the market for used cars (or, as those selling them prefer to say, “pre-owned” vehicles). On August 11th the Bureau of Labour Statistics reported that annual headline inflation in July again hit 5.4%. But when you look under the hood, the gauge for used cars offers reassurance: prices levelled off, suggesting that the inflation scare may prove transitory.