The average price of a new car has risen 63.7% in the past two years, new figures show.
Factors causing the spike include Brexit, pandemic-induced global shortages and the war in Ukraine.
Economist Tom Gillespie told Breakfast Briefing this morning: “Since the start of the pandemic we’ve had prices grow by 6% each quarter.”
“If you look at the two years before the pandemic, the average quarterly inflation was about 0.8%.”
Meanwhile, mid-range cars have depreciated less in the past two years.
For example, in July 2021 a 2008 Audi A4 would have sold at an average price of €10,500. Buyers could now expect to pay €12,129 for the same car.
There are signs of the spike stabilising however, with average inflation dropping to 4% in the last quarter.
High demand has caused inflation in used electric vehicles to reach 6.6% - meaning EV owners will now have the upper hand if they choose to trade in.
In response to the new figures, online marketplace DoneDeal said: “If the car market can be thought of as a sign of things to come, then it surely acted as the canary in the coalmine for inflation in the wider economy.”
Mid-range and high-end combustion engine vehicle prices are expected to stabilise in the coming months, but the lower end of the market will continue to suffer supply shortages.
Main image shows cars driving bumper to bumper.