Reuters recently reported that steel prices in the Persian Gulf rose 10 percent in a week. Because steel is now a global commodity, sustained price movements on the other side of the globe will eventually affect prices in the U.S. According to the Automotive Aftermarket Industry Association, from January through May of this year, metal auto parts prices rose about 10 percent, so they are likely to rise further.
Why, you may ask, is this important? Car repair prices—including labor and parts—have historically risen at a very slow rate, usually 2 to 3 percent per year. With the U.S. economy struggling, the amount your mechanic or technician charges for his or her time is unlikely to rise much; it may even drop a bit. However, the higher prices of the parts s/he installs on your car are likely to keep overall car repair costs rising. This time of year, car dealers are eager to cut deals to reduce bloated inventories, so the decision to buy a new car (rather than keep your current rust bucket running a bit longer) may be getting easier.