A collapse in used car prices could help drive inflation below the Fed’s 2% target rate

• A decline in used car prices should help drive inflation lower, according to Fundstrat’s Tom Lee.
• The Manheim used car price index fell 3.2% in the first two weeks of June and is down 9.4% year over year.
• “Manheim price index shows completely opposite trend of CPI used cars [prices],” Lee said.

A steady decline in used car prices should have a lasting effect on moving future inflation readings lower and towards the Federal Reserve’s long-term 2% target rate, according to Fundstrat’s Tom Lee.

Lee pointed out on Monday that the closely watched Manheim Used Vehicle Value Index fell 3.2% in the first two weeks of June and is down 9.4% from the end of June 2022.