Morgan Stanley analysts expect auto insurance inflation to decelerate at the start of the second half of the year.

Insurance (NYSEARCA:KIE), (NYSEARCA:IAK), especially in Auto, has been a persistent driver of U.S. inflation, but U.S. insurance analysts for Morgan Stanley said insurers’ losses are decreasing, “suggesting that companies have now less incentives to file for large rate updates.”

MS economists are projecting auto insurance CPI to be 14% by the end of the year, down from 20% now.

“A nuance worth highlighting is that the Fed and our economists focus more on PCE inflation than CPI, and they point out that insurance CPI responds more strongly to costs shocks than PCE does, because CPI follows insurance prices while PCE keeps track of broader net insurance costs,” wrote Katy L. Huberty, Morgan Stanley analyst and global director of Research. “Hence, our Economists expect faster auto insurance CPI disinflation compared to PCE.”

Auto insurance stocks: Progressive Corp. (PGR); Allstate Corp. (ALL); Roadzen, Inc. (RDZN).