July 2015 Consumer and Producer Price Indices (incl. Forest Products)

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The seasonally adjusted Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1% in July (+0.2% expected). The indexes for food, energy, and all items less food and energy all rose slightly in July. The food index rose 0.2%, and the energy index rose 0.1% as an increase in the gasoline index more than offset declines in other energy component indexes.

The index for all items less food and energy also rose 0.1% in July. A 0.4% advance in the shelter index was the main contributor to the increase, though the indexes for medical care and apparel also rose. In contrast, the index for airline fares fell sharply, and the indexes for used cars and trucks, household furnishings and operations, and new vehicles all declined. 

The all items index increased 0.2% for the 12 months ending July. The 12-month change has been rising since April. The index for all items less food and energy increased 1.8% YoY; this was the fourth time in 5 months the 12-month change was 1.8%. The food index increased 1.6% over the last 12 months. The energy index, however, continues to show a 12-month decline, falling 14.8% over the past year.

The seasonally adjusted Producer Price Index for final demand (PPI) advanced 0.2% in July (-0.8% YoY) -- in line with expectations. The MoM increase in the final demand index can be traced to prices for final demand services (especially motel rental rates), which climbed 0.4%. In contrast, the index for final demand goods edged down 0.1%.

Final demand goods: The index for final demand goods edged down 0.1% in July after rising 0.7% in June. The decrease is mostly attributable to a 0.6% decline in prices for final demand energy. The index for final demand foods inched down 0.1%, and prices for final demand goods less foods and energy were unchanged.

Product detail: A major factor in the July decrease in prices for final demand goods was the index for residential natural gas, which declined 2.4%. Prices for chicken eggs, home heating oil, pork, and nonferrous metals also moved lower. In contrast, the index for gasoline advanced 1.5%. Prices for corn, motor vehicles, and basic organic chemicals also increased. 

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The price indexes we track mostly rose in July but were mixed on a year-over-year basis. Only Wood Fiber increased year-over-year. 

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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.