The average cost of auto insurance premiums was 8% higher in January compared to the same month a year earlier, the biggest annual increase in over 14 years.

Data from the national statistics agency INEGI shows that the last time there was a larger year-over-year increase was in November 2007, when premiums were up 8.4%.

Premium increases have been above the level of inflation every month since August. The inflation rate last month was 7.1%.

The higher insurance costs cannot be explained by an increase in vehicle theft as the incidence of that crime has declined during three consecutive years. According to the Mexican Association of Insurance Institutions, 62,000 insured cars were stolen last year, the lowest figure since 2015. Half of all theft incidents occurred in just three federal entities – Mexico City, México state and Jalisco.

Ernesto O’Farrill, president of the financial conglomerate Grupo Bursamétrica, told the newspaper El Universal that higher costs for auto parts due to global shortages and the depreciation of the peso against the U.S. dollar are behind the price hikes.

The average cost of a greenback in January was 20.5 pesos, according to the Bank of México, up 2.9% from the same month in 2021. Global supply chain disruptions linked to the pandemic have affected the availability of many products beyond spare parts.

According to the federal government’s National Commission of Insurance and Finance, the total value of auto insurance policies sold last year was 108 billion pesos (US $5.3 billion), a slight decrease compared to 2020. Weaker sales of new cars was behind the decrease.

All motorists using federal highways have been required to have insurance since 2019, while coverage is obligatory in about half of all states regardless of the roads on which the vehicle is used.

With reports from El Universal