December 2012 Consumer and Producer Price Indices

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The seasonally adjusted Consumer Price Index was unchanged in December. Over the last 12 months, the all items index increased 1.7 percent before seasonal adjustment.

The gasoline index declined again in December, but other indexes, notably food and shelter, increased, resulting in the seasonally adjusted all items index being unchanged. Gasoline was the only major energy index to decline; the indexes for natural gas and electricity both increased.  Within the food category, five of the six major grocery store food groups increased as the food at home index rose for the third consecutive month.

The index for all items less food and energy increased 0.1 percent in December, the same increase as in November. Besides shelter, the indexes for airline fares, tobacco, and medical care also increased. The indexes for recreation, household furnishings and operations, and used cars and trucks all declined in December.

The all items index increased 1.7 percent over the last 12 months, compared to a 1.8 percent figure in November. The index for all items less food and energy rose 1.9 percent over the last 12 months, the same figure as last month. The food index has risen 1.8 percent over the last 12 months, and the energy index has risen 0.5 percent.

The seasonally adjusted Producer Price Index for finished goods (PPI) declined 0.2 percent in December. Prices for finished goods fell 0.8 percent in November and 0.2 percent in October. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 0.3 percent, and the crude goods index increased 2.5 percent. On an unadjusted basis, the finished goods index rose 1.3 percent in 2012, compared with a 4.7-percent advance in 2011.

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Prices received for intermediate goods rose relative to a year earlier (0.3 percent); the cost of wood fiber declined (-1.3 percent), whereas the other categories rose on a year-over-year basis -- especially prices for softwood lumber (+17.3 percent).

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.