There are several earlier posts on this blog that described some of the failings (both in data and methodology) that result in a less-than-perfect used vehicle component of the Consumer Price Index. Over long periods of time, however, the Used Vehicle CPI does roughly reflect the true course of used vehicle values. That is confirmed by the close correlation to the Manheim Index.
But that true trend is always revealed on a delayed basis. That’s because the Used Vehicle CPI is based on a three-month moving average of data that had already been previously smoothed. The graph below shows the degree to which the Used Vehicle CPI lags the Manheim Index.
Today’s release of the CPI had used vehicle values falling 0.9% in October versus September. The Manheim Index, released more than a weak prior, had used vehicle prices rising by 1% in October and the year-over-year declining diminishing.