November 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) declined 0.3% in November. Over the last 12 months, the all items index increased 1.3% before seasonal adjustment.

The gasoline index posted its sharpest decline since December 2008 and was the main cause of the decrease in the seasonally adjusted all items index. The indices for fuel oil and natural gas also declined, and the energy index fell 3.8%. The food index rose 0.2% with major grocery store food groups mixed.

The index for all items less food and energy increased 0.1% in November. The shelter index rose 0.3%, and the indexes for medical care, airline fares, and alcoholic beverages also rose. In contrast, the indexes for apparel, used cars and trucks, recreation, household furnishings and operations, personal care, and new vehicles all declined in November.

The all items index increased 1.3% over the last 12 months, a notable decline from the 1.7% figure from the 12 months ending October. The index for all items less food and energy has increased 1.7% over the last 12 months, compared to 1.8% for the 12 months ending October. The food index has risen 3.2% over the span. However, the energy index has declined 4.8% over the past 12 months, with the gasoline and fuel oil indexes both falling over 10%.

The seasonally adjusted Producer Price Index for final demand (PPI) fell 0.2% in November. This decrease followed a 0.2% rise in October and a 0.1% decline in September. On an unadjusted basis, the index for final demand advanced 1.4% for the 12 months ended in November, the smallest 12-month increase since a 1.2% rise in February 2014.

In November, the 0.2% decline in final demand prices can be traced to the index for final demand goods, which decreased 0.7%. In contrast, prices for final demand services advanced 0.1%.

Final demand goods:  The index for final demand goods fell 0.7% in November, the fifth consecutive decrease. The broad-based November decline was led by prices for final demand energy (especially gasoline: -6.3%), which dropped 3.1%. The index for final demand goods less foods and energy edged down 0.1%, and prices for final demand foods fell 0.2%. 

Final demand services:  The index for final demand services inched up 0.1% in November subsequent to a 0.5% rise in October. In November, prices for final demand services less trade, transportation, and warehousing, as well as margins for final demand trade services, rose 0.1%. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, the index for final demand transportation and warehousing services dropped 0.8%. 

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Of the price indices we track, only Pulp, Paper & Allied Products rose in November (relative to October). By contrast, Pulp, Paper & Allied Products and Intermediate Materials were lower compared to a year earlier. 

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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.