The cost of living rose less than forecast in May, restrained by the first drop in food prices in almost four years and signaling inflation remains under control. The consumer price index was up 0.1 percent after falling 0.DETROIT – American consumers ignored tax increases and trudged through winter weather to buy new cars and trucks at an unusually strong pace last month. It was the auto industry’s best January since 2008.
“It was like a sprinter out of the starting blocks,” said Mike Jackson, CEO of AutoNation Inc., the country’s largest auto dealership chain.
U.S. auto sales rose 14 percent to more than 1 million. Toyota’s 27 percent gain was the biggest among the major car companies.
Ford’s sales jumped 22 percent, while GM and Chrysler each reported 16 percent gains compared with a year earlier.
The results left the industry optimistic about the new year. Businesses bought more trucks. Consumers are ready to buy – their cars have reached a record average of 11.3 years old – and banks are making it easier with low interest rates and looser credit terms.
The stock market may also have inspired car buyers. The Standard & Poor’s 500 index had its strongest January since 1997, and new-car purchases tend to rise or fall with the market.
Also, employers have been hiring at a steady – if not spectacular – pace.
“We’re in a fundamentally sound trajectory,” said Mustafa Mohatarem, chief economist for GM. He said the recovery from the Great Recession in 2008 is still modest, but “those recoveries tend to be much more sustainable.”
Whatever the incentive, people didn’t let chilly weather, or the heavier hand of the U.S. Treasury, stop them from car shopping.
Sales ran at an annual pace of 15.3 million in January. If that holds for the rest of the year, automakers will sell nearly 1 million more vehicles than in 2012, when sales rose 13 percent.
Analysts predict full-year sales of 15 million to 15.5 million this year. Although still far from the peak of about 17 million in 2005, the industry could sell a whopping 5 million more cars and trucks than it did in 2009, the worst year in three decades.
The strong January numbers came even though higher taxes reduced take-home pay for most Americans.
Taxes rose after a 2 percent reduction in Social Security taxes that was in place for two years expired Jan. 1.
