- Several travel-related costs went down through June despite airport chaos and sky-high inflation.
- Prices on flights, hotels, and car rental costs all fell considerably as travel demand waned.
- Though prices sit well above last year’s levels, declines offer some relief for prospective travelers.
Inflation is running white-hot. Airports are struggling through widespread staff shortages and luggage nightmares. Flight cancellations are historically rampant.
Yet summer travel is one of the few things in the US economy that’s actually getting cheaper.
Data out Wednesday showed prices soaring 9.1% in the year through June, reflecting the fastest inflation since November 1981. Higher energy prices powered most of the uptick, but a few categories showed prices declining over the same period. A common thread through many of the price drops: they took place in areas crucial to summer travel.
Airline travel, hotel and motel accommodation, and car and truck rental all got cheaper last month, according to the Consumer Price Index. The decline in airfares snapped a seven-month streak of price hikes, offering the first sign of relief after the largest increases in decades. Car rental costs sit well below the peak seen last year. Hotel inflation has been stickier, but the June slump marks the biggest one-month drop since the start of the year.
To be sure, prices still sit much higher than they were one year ago. But the June inflation report suggests prices are finally cooling off after surging ahead of peak travel season.
Flights are getting cheaper
Airline ticket prices slid 1.8% in June, reflecting the largest monthly decline since September 2021.
The downtrend makes more sense after glancing at the latest travel trends. Airline bookings in the US were down 2.8% month-over-month in June, according to Adobe Analytics data published Monday. Online spending on domestic flights sank 5.7% through the month to $7.9 billion. Overall spending is still above pre-pandemic levels, but overall bookings are below those levels by about 1%, hinting sky-high prices have dissuaded Americans from summer travel.
“The changing economic landscape and inflated expense for travel is impacting how consumers reprioritize their budgets,” Vivek Pandya, lead analyst with Adobe Digital Insights, said in a statement. “While flight prices saw mild easing in June, they remain high. As a result, we are starting to see summer bookings growth plateau and dip below pre-pandemic levels.”
Lodging prices are turning over
Finding an affordable place to stay also got slightly easier last month. Prices for hotels and motels plunged 3.3% through June, erasing much of the run-up seen through the spring.
The slump also countered the trend seen throughout the housing sector. Prices for rent, school housing, and even household insurance all rose last month, extending the trend of ever-climbing housing costs. With travel demand starting to wane, hotels are a rare housing option with tumbling prices.
Getting around your vacation spot is cheaper
Traveling around a vacation spot is also slightly more affordable than it was in May. Car and truck rental prices dove 2.2% through June, marking the first drop since January.
The decline extends a long downtrend that started roughly one year ago. The semiconductor shortage that hampered car production in 2021 spilled over into the rental industry, as firms that struggled through lockdowns were left with fewer cars to loan out. Prices rebounded somewhat in early 2022, but the auto manufacturing recovery has eased some pressures on the rental sector.
Though it didn’t show up in the June inflation report, gasoline prices have fallen steadily over the past several weeks. That offers even more relief to prospective travelers. With the US squarely in its most popular travel season, Americans might be getting a break from the price woes that delayed some vacation plans just months ago.