Cox Automotive reports average transaction prices for new vehicles sold in the U.S. increased by a mere 1.2% year-over-year and 0.4% month-over-month in June, indicating manufacturers and retailers are protecting consumers from rising costs.

This dynamic is not sustainable, warns Erin Keating, an executive analyst with Cox.

“The months ahead are shaping up to be ‘the big squeeze,’ as the real headline this summer will be the growing disconnect between rising costs for automakers and dealers and relatively flat consumer prices,” Keating writes. “As average MSRPs continue to climb, the modest increase in transaction prices suggests the businesses are absorbing more of the burden and not passing the added costs to consumers — something that will impact profitability if the trend persists.”

Correspondingly, incentives as a percentage of ATP also increased in June, up 0.1% to 6.9% month-over-month, and days’ supply improved from 72 to 82.

Read the full report at Cox Automotive