Transportation and Inflation

Inflation and Transportation

Inflation is when prices rise and purchasing power gets weaker over time. Inflation is driven by a number of factors and which factors have the most impact can change from month to month. This page takes a look at how transportation costs can impact inflation from the perspective of the consumer, transportation providers, and non-transportation industries purchasing transportation services.

Year-in-review

Prices faced by consumers

In the first year of the pandemic (starting around March 2020), the CPI for transportation was lower than the same month of the previous year, showing that prices faced by consumers for transportation were falling. However, since February 2021, the transportation CPI has shown steady positive growth when compared to the same month in the previous year, indicating increased prices and therefore increasing inflation.
Vehicle ownership: Before September 2020, the CPI for used cars and trucks was lower than for new vehicles. After March 2021, the CPI for used cars and trucks rose above the CPI for new vehicles. This can be attributed to supply chain issues which slowed the production of new cars and increased the demand for used vehicles. For more information on supply chain topics, visit the BTS Supply Chain Indicators page.
Vehicle operation: The CPI for motor vehicle insurance fell in April 2020 when COVID-19 reduced travel and then gradually increased, rising above the March 2020 level in January 2022. The CPI for gasoline likewise fell significantly in April 2020 but had been declining since December 2020. The CPI for gasoline rose 82.9 percentage points from its May 2020 low to a peak in June 2022. For more information on fuel, visit the BTS Fuel Revenue, Tax, and Price page.
Transportation's contribution reached a high of 59% in June 2021 due to high fuel prices. Since June 2021, the contribution of transportation to inflation has remained positive but slowly decreasing.

Prices faced by transportation providers

Fuel prices, as measured by fuel PPI, dipped below January 2019 levels in March 2020 when COVID-19 first reduced travel, but gradually rose above by the end of 2020. The price of jet fuel peaked in May 2022 and diesel fuel and gasoline peaked in June 2022.
Since January 2019, the price of transportation equipment, as measured by the PPI for transportation equipment, has increased. The price for truck trailers, truck and bus bodies, and boats increased the most with rapid increases starting in early 2021 and continuing through 2022.
Since 2019, industries purchasing transportation services have faced increased transportation costs, as measure by the transportations services PPI, for all types of transportation, albeit not continuously. Airline passenger services declined in March 2020, due to COVID-19, but by March 2022 surpassed pre-pandemic levels and continued to increase through early 2022. The prices for many modes began to level off or decline after June 2022.
Transportation and related services account for a small share of price changes faced by industries purchasing services.

CPI for Overall Transportation

The annual change in CPI is used as a measure of inflation. Year-over-year increases in the transportation CPI indicate increasing prices faced by consumers.

Consumer Price Index

The Consumer Price Index (CPI), as calculated by the Bureau of Labor Statistics, measures the average change over time of prices paid by consumers for a market basket of consumer goods and services. The graph below represents the CPI by commodity. The values are indexed to January 2012. Values above 100 (shown as the area above the straight line axis of each commodity), represent increased prices and a positive contribution to inflation, whereas the values below 100 (shown as the area below the straight line axis of each commodity), represent decreasing prices and a negative contribution to inflation.

Vehicle Ownership and Operating Costs

Vehicle Ownership Costs

Vehicle ownership costs are represented by the CPI for new vehicles, used cars and trucks, and new and used motor vehicles.

Vehicle Operating Costs

Vehicle operating costs are represented by motor vehicle insurance, parking fees and tolls, maintenance and repair, fees, parts and equipment, tires, and gasoline.

Contribution of Transportation to Overall Inflation

The below graph compares the percent change from the same month of the previous year in the contribution of transportation to inflation against the percent change in all items. When looking at the breakout of contribution of transportation to inflation by item, the majority of months see motor fuel as the largest contributor to inflation.

Producer Price Index

The producer price index (PPI) measures inflation from the perspective of costs to industry or producers of products. When producers face input inflation, they often pass the increases in their production costs on to retailers and consumers, which is seen in increases in the CPI. The following series of graphs look at the changes in price transportation providers faced in purchasing fuel and transportation equipment and the changes in price faced by producers purchasing transportation services.

Prices Faced by Transportation Providers

Transportation Fuel PPI

Transportation providers purchase fuel to provide services. Fuel PPI indicate the changes in fuel prices faced by transportation providers.

Transportation Equipment PPI

Transportation providers also purchase transportation equipment to provide services. Transportation equipment PPI indicate the changes in transportation equipment prices faced by transportation providers. Increases in the price of transportation equipment increase the cost to provide transportation services.

Prices Faced by Industries Purchasing Transportation Services

Transportation Services PPI

Increases in transportation services PPI indicate increases in production costs faced by industries purchasing the services.

The contribution to change in intermediate demand for services tracks how much of the change in the price for all services sold to businesses as inputs to production (excluding capital investment) can be accounted for by a specific service (e.g., transportation, warehousing, building maintenance, etc.). In other words, out of 100%, the percentage represents the change in price faced by industries for all service inputs accounted for by the item. The graph below shows the percentage of the change in price for all services purchased by industries that can be accounted for by transportation and related services from the same month last year or from the previous month.

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Recommended citation

U.S. Department of Transportation, Bureau of Transportation Statistics, Transportation Economic Trends, available at www.bts.gov/product/transportation-economic-trends.

Bureau of Transportation Statistics

The Bureau of Transportation Statistics, part of the U.S. Department of Transportation, is the preeminent source of statistics on commercial aviation, multimodal freight activity, and transportation economics, and provides context to decision makers and the public for understanding statistics on transportation.