This week's Consumer Price Index showed insurance prices up 22% over the last year, the largest annual jump seen in data that goes back 40 years. It's the latest sign the American driver is facing the worst price shock in a generation.

The big picture: Costs are soaring at every turn, from decades-high borrowing costs for car loans to insurance rates that are rising at the quickest pace on record.

• It's an affordability crisis slamming consumers in an area where they have little ability to cut back.

By the numbers: The average interest rate on an auto loan is the highest in almost 20 years, according to Bankrate, a surge that reflects the Federal Reserve's rate-hiking campaign.

• Loan rates can also be influenced by other factors including credit scores and the cost of the car.

Auto prices have dropped some, but remain well above the prices seen before the pandemic.

• The average transaction price of a new car was roughly $47,200 last month, according to new data from Cox Automotive, down from the peak in 2022 but still about $10,000 more than the average price on the eve of the pandemic.
• A used car, on average, is $18,600 — nearly 40% higher than in 2019.

Perhaps the most stunning, and stickiest, car-related cost surge has been auto insurance.

• It was a key factor that contributed to this week's hotter-than-expected inflation report.

Context: Insurers are playing catch-up after pandemic-era distortions that pushed their costs up, which were ultimately passed to the consumer.

Repair costs—already on the upswing higher as cars get more high-tech and costlier to fix—have surged. Supply chain snafus made parts hard to find; mechanics, too, were scarce and demanded higher wages in a tight labor market.

• "These things were percolating behind the scenes, but the industry didn't feel it during lockdown," said Joseph Wodark, an executive at risk-assessment firm Verisk.
• "All of these things converged post-pandemic and insurers were left on their heels," Wodark said.

No one was driving during lockdown so there were no collisions — insurers actually gave money back to policyholders. Then the economy opened back up, drivers hit the road again and higher instances of crashes returned — with insurers having to pay out more than they were taking in from customers.

• It's a long, state-by-state slog for insurers to get rate hikes approved. That's why the rate increases are only happening now.
• "The longer it took to address that issue, the deeper in the hole the insurers were and the more price increases they actually needed," said Yaron Kinar, an analyst who covers insurers at Jefferies.

What to watch: "The system at this point just has a lot of inflationary forces," Allstate CFO Jess Merten said at a conference last month.

• Merten said more states are allowing steeper rate increases, "or else the companies who do business in their state are going to pull back."
• "I think consumers are feeling the pain. There's no question about that," he said.

The bottom line: There are indicators that show some car owners are increasingly pinched—a rare signal of trouble for the otherwise strong U.S. consumer.

• Data from the New York Fed shows delinquency rates for auto loans are at the highest since the 2008 recession, which their researchers note is more pronounced among more recent borrowers—those who faced higher car prices and had to borrow more at a higher rate to cover it.
• JPMorgan CEO Jamie Dimon said on Friday that the bank has noticed some cracks in the subprime auto market, where borrowers have low credit scores (or limited histories).