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Summer vacation is getting expensive.
Prices for airlines, hotel stays, food, and car and truck rentals have all soared over the past several months as part of a larger inflation trend amid supply chain issues and an economic reopening. But they all hit new heights in June.
Just look at the chart below, which details travel inflation during 2021 based on the Bureau of Labor Statistic's Consumer Price Index, which tracks how the prices of a broad variety of goods and services change from month to month.
Car and truck rental prices have increased the most since January, currently 64.4% higher than they were at the beginning of the year. From May to June alone, vehicle rental prices increased by 5.2%.
Prices for hotel stays are also climbing after dipping slightly in May. They increased the most month-over-month, by 7.9% from May to June. They're currently 19.8% higher than they were in January.
Plus, if you eat our or hit the grocery store while on vacation, food like beef, pork, and eggs cost more these days.
Though not called out in BLS data, Uber, Lyft, and Airbnb prices are also on the rise.
Airline prices have also ticked up since the beginning of the year, but not to the extent that lodging and vehicle rentals have. They saw a more modest increase of 2.7% from May to June, currently 15.4% more expensive than at the start of 2020.
Consumer prices overall surged even more than expected last month, rising 0.9% between May and June. That far exceeded Bloomberg's consensus estimate among economists of 0.5%. It's the highest month-over-month inflation rate since April 2008's 1.0% increase.
The index was 5.4% higher than it was in June 2020, also higher than economists' expectations for a 4.9% year-over-year increase, according to Bloomberg. June's annual increase follows a 4.9% year-over-year increase in May.
The travel industry itself has contributed to the surge in prices. After spending a year in quarantine, Americans were itching to travel again. As many became vaccinated and restrictions lifted, some were finally ready to pack their bags.
As early as late March, travel was on the verge of a booming comeback. Americans had plans to travel soon, card spending on airlines and hotels was already up, and airports started seeing their busiest weekends since pre-pandemic times.
Set to fuel the travel boom are wealthy millennials, who are most likely to spend their pandemic savings on travel this year, according to a May survey from Accenture and TripAdvisor that polled 1,000 Americans. It found this cohort comprised the highest rate of luxury bookings (trips costing at least $5,000) among all other generations surveyed.
"Whether it's a domestic or international flight, young travelers are going the distance and heading to beaches, cities, and even on cruises," the survey reads.
It's all good for the economy, which needs such spending to get back on its feet. But while the upside of high travel demand may be a healthier economy, the downside is that Americans will have to pay more for it. It spins an endless inflation cycle: The more everyone wants to travel, the more costly doing so will be.
It's yet to be seen whether inflation is a temporary effect from reopening or a longer-term problem. But travel inflation may not be going anywhere soon. That vehicle rentals have seen the most consistent and highest demand indicates not everyone is comfortable traveling publicly just yet. It's a sign that we may see a bigger uptick in airline and hotel spending - and prices - down the road once they're ready for more public travel.
That is all to say: you'll be shelling a lot more to fly, drive, and relax this summer.
