October 2014 Consumer and Producer Price Indices (incl. Forest Products)

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The seasonally adjusted Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in October. Gasoline and other energy indexes declined, offsetting increases in shelter and an array of other indices to leave the seasonally adjusted all-items index unchanged. The gasoline index fell for the fourth month in a row, declining 3.0%, and the indices for natural gas and fuel oil also decreased. The food index rose slightly in October, with major grocery store food groups mixed.

The index for all items less food and energy increased 0.2% in October. Besides the shelter index, airline fares, household furnishings and operations, medical care, recreation, personal care, tobacco, and new vehicles were among the indices that increased. The indices for used cars and trucks and for apparel declined in October. 

The all items index increased 1.7% over the last 12 months, the same increase as for the 12 months ending September. The index for all items less food and energy increased 1.8% over the span, and the food index rose 3.1%. In contrast, the energy index declined 1.6% over the last 12 months.

The seasonally adjusted Producer Price Index for final demand (PPI) rose 0.2% in October. This increase followed a 0.1% decline in September and no change in August. On an unadjusted basis, the index for final demand advanced 1.5% for the 12 months ended in October, the smallest 12-month increase since a 1.2% rise in February 2014.

The index for final demand services moved up 0.5% in October, the largest increase since a 0.5% rise in July 2013. A 26.1% jump in margins for fuels and lubricants retailing accounted for nearly four-tenths of that 0.5% increase. (Trade indexes measure changes in margins received by wholesalers and retailers.) At the same time, the index for final demand goods moved down 0.4%, the fourth consecutive decrease. Over eight-tenths of the 0.4% decline in prices for final demand goods can be attributed to the index for gasoline, which dropped 5.8%.  

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Of the price indices we track, only Wood Fiber rose in October (relative to September); coincidentally, Wood Fiber also reached a new all-time high index value. Compared to a year earlier, all indices except Pulp, Paper & Allied Products were higher. 

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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.