New vehicle shortages and supply chain issues aren’t the only things to blame for the recent spike in car prices. One of the main culprits is inflation.

How Does Inflation Affect Car Prices?

Posted on May 1, 2023April 17, 2023 by Shield Insurance Agency

Nationwide Blog | December 13, 2022 | Car PRices | Auto Insurance | Start A Quote Today!

New vehicle shortages and supply chain issues aren’t the only things to blame for the recent spike in car prices. One of the main culprits is inflation. Consumer inflation soared to 7% in 2021, the highest it’s been in almost 40 years. [1]

Inflation is defined as a loss of purchasing power over time. Rising inflation can be impacted by rising consumer demand or other developments that have little to do with economic conditions, such as limited oil production and supply chain problems. [2]

How do dealerships price cars?

If you’re in the market for a new or used car, it can be confusing to know which price is fair. In order to understand how to negotiate, we must first look at the difference between the MSRP and invoice price. The manufacturer’s suggested retail price, or MSRP, is the price car manufacturers recommend dealerships sell their vehicles for. The invoice price, or the dealer price, is the amount a dealership pays the manufacturer. Car dealerships aren’t like traditional stores, however, and the MSRP is not the final price, but usually the starting point for negotiations. Depending on the demand for the model, you may end up paying the full MSRP, but you’ll almost always be able to negotiate with the dealership. [3]

How do car prices become inflated?

Car prices have helped push inflation sharply higher over the past year due to high demand and little to no availability. Demand has been so strong that automakers have been cracking down on dealers who charge above list price, threatening to withhold fresh inventory. Analysts had been hoping that chip shortages would ease up, but they’re predicting that we’ve got at least another year for the supply chain to heal if not more. If car prices keep climbing briskly, it’ll be hard for inflation overall to moderate. Buyers and dealers are desperate for more vehicles to sell, but they don’t see an abundance of inventory before 2023 and 2024. [2]

Are used car prices affected by inflation?

Used cars were unfortunately hit hardest by rising inflation. Due to pent-up demand for cars and supply issues, used car and truck prices rose more than 10% in April and June 2021. Inflation has soared to levels not seen since the 1980s, but the used vehicle prices that powered the initial surge are now falling back to earth. After months of extraordinarily large price hikes, it might finally be a good time for car buyers. If the supply of new cars recovers, that’ll probably alleviate supply pressures in the used-vehicle market as more cars are resold. [4]

Tips for buying a car

It can be overwhelming to start the process of buying a car, but we have a few tips for you.

Determine your budget. Once you know how much you are willing to spend, you can start to narrow down the list of cars you want.
Do the research. Start by visiting the websites of automakers and other car sites to get an idea of inventories and features available.
Know the model price. Research the model invoice or wholesale price so you have a general idea of what the dealer paid.
Go for a test drive. Make an appointment and take your time behind the wheel until you’re sure it’s the right fit for you.
Negotiate a fair price. Check that the list of fees associated with the sale is accurate and not an unnecessary add-on.

Learn more tips on buying a new or used car the right way. [5]

Sources

[1] “Inflation is driving up car prices. 6 tips for buying in 2022,” cbsnews.com/news/inflation-new-used-car-prices-2022 (accessed July 8, 2022).

[2] “Few Cars, Lots of Customers: Why Autos Are an Inflation Risk,” nytimes.com/2022/04/10/business/economy/cars-inflation.html (accessed July 8, 2022).

[3] “Car MSRP vs. Invoice: Everything You Need to Know,” caranddriver.com/research/a31874008/car-msrp-vs-invoice (accessed July 8, 2022).

[4] “It’s finally a better time to buy a used car,” businessinsider.com/used-car-prices-market-good-time-buy-inflation-easing-2022-5 (accessed July 8, 2022).

[5] “How to Buy a New Car the Right Way,” blog.nationwide.com/tips-for-buying-a-new-car (accessed July 8, 2022).

Disclaimer:

The information included here is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts. It is the reader’s responsibility to comply with any applicable local, state or federal regulations. Nationwide Mutual Insurance Company, its affiliates, and their employees make no warranties about the information nor guarantee of results, and they assume no liability in connection with the information provided. Nationwide and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company. © 2022 Nationwide and Shield Insurance

Personal Finance Tips for Dealing with Inflation

Posted on April 17, 2023April 10, 2023 by Shield Insurance Agency

Nationwide Insurance | September 16, 2022 | Inflation | Start a Quote Today!

Inflation is at the top of everyone’s minds right now. Our recent Nationwide Retirement Institute® survey found the majority of U.S. parents (60%) listed inflation or the rising cost of living as their top financial concern right now. [1] Coming out of the Covid-19 pandemic, we have seen supply-chain issues, as well as rising consumer demand. Add in the fear of a potential recession, there’s a lot in the current environment that is putting pressure on families.

Personal Finance Tips for Dealing with Inflation

We’ll discuss what is causing inflation and how to save money with our personal finance tips that you can take to help deal with inflation.

What is causing inflation?

To put it simply, inflation is a measure of the rate that goods and services are rising in the economy. Inflation can occur nearly everywhere, from basic daily needs and services such as food and housing, and also in luxury goods, such as cosmetics, vehicles, and more. [2] When inflation is rising, it can make consumers’ purchasing power less valuable. If the inflation rate in a given year was 5% and your yearly salary increase was only 3%, you would have less purchasing power in the next year.

So, what exactly causes inflation? There are a variety of factors that can play into the inflation rate rising, but we’ll break down a few here.

Supply and demand

When consumers want to spend more either with cash or by accessing extra credit, businesses could raise prices due to not being able to keep up with supply at the rate that consumers are wanting. Businesses also might see this as an opportunity they can raise their prices more without losing customers, as demand is so high that consumers will buy regardless.

Supply chain issues

Supply chain issues can also lead to increase inflation. The coronavirus pandemic forced many factories to either shut down or limit production. This led to less supply across many different industries. On top of that, there has been a shortage of workers across different industries and it is more expensive to ship products right now.

In short, there is often not one single issue that drives the increase in inflation, and there are a variety of factors that come into play and affect different industries all at once. [3]

How to deal with inflation

While we can’t personally affect how inflation is roaring throughout the country, there are different steps we can take to help ourselves save money and not feel the sting of inflation as hard.

Make a budget

One good step is making a budget to track how much you are spending each month to hold yourself more accountable. You might be spending more than you realize in some areas or find that you have a recurring expense that you forgot about. You can then reallocate your spending to different areas, invest your money, or save some money based on your budget. For some more tips on how to create a budget, view these tips from The Balance or start developing a realistic plan with our budget worksheets.

Save money at the grocery store

While many of us are feeling the extra cost of food and groceries, there are many ways we can try to grocery shop on a budget. Our previous blog goes into detail on 14 different ways that you can save on groceries so you have that money to use elsewhere.

Make extra money with a side job

Side gigs have become increasingly popular these days, as many of us look for some extra cash to meet our financial goals. There are a variety of different ways you can make extra money with a side job, depending on your time commitment and how much you are looking to make.

Here are 13 different side jobs that provide a high reward for low commitment.

Invest

Investing can be a way to get out ahead of inflation and potentially receive a better rate of return on your money. Traditional savings accounts will most likely not provide a larger rate of return than the cost of inflation, so you may not be taking full advantage of your money by leaving it all in a savings account.

Nationwide has many different options when it comes to helping you prepare for your financial future with investing and retirement. Learn more about our annuity, life insurance, mutual funds, ETFs, retirement plans, and more here.

If you are looking for a financial specialist who can help you with your investing needs, you can find one here.

Take advantage of insurance discounts

Insurance discounts are also a great way to keep yourself on budget and save some extra money. Nationwide offers discounts on car insurance and gives our members a variety of different ways to save. We also believe that dependable homeowners insurance shouldn’t strain your budget. View our full range of available home insurance discounts here to help yourself start saving more today.

Work with a finance professional

To make sure you are staying on track with your financial goals, a financial professional can help with money and retirement planning. No matter your stage of life or where you are at in your retirement planning, you can find a financial professional who fits your unique situation to help you reach your financial goals.

Find a financial professional here.

Inflation Conclusion

While we can all certainly feel the sting of inflation in our daily lives and the products and services we buy regularly, there are various ways that we can work to save money and come out ahead. Whether it’s making a budget, finding ways to save at the grocery store, investing, finding a side job, or using Nationwide’s insurance discounts, find what works best for you on how to save money in your daily life.

Inflation Sources:

[1] Nationwide Financial Family Finances Flash Poll Findings, August 2022

[2] https://www.investopedia.com/ask/answers/111314/what-causes-inflation-and-does-anyone-gain-it.asp

[3] https://www.nytimes.com/article/inflation-definition.html

Disclosure:

Investing involves market risk, including possible loss of principal, and there is no guarantee that investment objectives will be achieved.

NFM-21839AO.1

More fascinating blogs by Shield Insurance Agency

CEOs still grappling to define work’s new normal

Posted on February 9, 2023April 25, 2023 by Shield Insurance Agency

Worklife.com | BY LAURA PETRECCA | JANUARY 4, 2023 | Work’s new normal | Business Insurance

Inflation.

A potential recession.

Geopolitical uncertainty.

Managing a remote workforce.

Company leaders are buckling up for a bumpy 2023. After nearly three years of dealing with pandemic-induced stressors, they’re bracing for more tough times to come with economic instability, geopolitical risks, and talent-related concerns, among other looming issues.

As we enter the new year, more than a dozen top executives have shared their expected challenges with WorkLife. They also reflected upon their most pressing concerns in 2022 and addressed how they cope with continuous change.

The leaders work at firms that range from startups to well-established companies and represent different fields, such as communications, health care, food service, and entertainment. Yet, many of their concerns overlapped. In their predictions for 2023, one overarching theme emerged: expect the unexpected.

“Never before have CEOs faced so many different variables in trying to plan for, budget and strategize” for a new year, said Constantine Alexandrakis, CEO of leadership advisory firm Russell Reynolds Associates, who speaks with other CEOs regularly. “The unpredictability of the unpredictability is the biggest thing keeping us up at night.”

At his firm, “the biggest challenge will be navigating that uncertainty, pivoting resources, attention and investments to where the opportunities are and pivoting away from the spots that will be particularly troubled,” he said.

For Lisa Osborne Ross, U.S. CEO at public relations giant Edelman, the most daunting challenge of the last few years was simply accepting the ambiguity and uncertainty. “I thought the hard would be over by now,” she said. “But we still have yet to truly define our new normal, and that lack of clarity on the future of our workplace — and our world — continues. Being comfortable with those lingering unknowns, while still seeking to move forward and make progress, is not an easy position to be in.”

Looking ahead, “the biggest leadership challenge of 2023 will be learning how to not just survive but thrive, regardless of what comes our way,” she added.

Contending with internal and external issues | Work’s new normal

And indeed, there’s much coming their way.

There are internal concerns, such as keeping a remote workforce productive and engaged, as well as outside factors, such as inflation, economic instability, and the widespread effects of the war in Ukraine.

On the workforce front, Melissa Bouma, CEO of content marketing agency Manifest, said finding a hybrid work model where employees can effectively ideate and create is among her most significant issues as a leader.

Like countless other CEOs, Bouma also manages employees that had an incredibly tough past few years. “We went through the pandemic. We went through societal evolution. We went through a Great Resignation and reshuffle,” she said. And now there are concerns about inflation and the overall economy.

One of her biggest challenges in 2023 is “to find a way to encourage everyone at the same time to get excited and passionate and remain that way,” she said.