August 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) decreased 0.1% in August (in line with expectations). The gasoline index declined sharply during August and was the main cause of the seasonally adjusted all-items decrease. Other energy indexes were mixed, with the fuel oil index continuing to decline but the indexes for electricity and natural gas increasing. The food index rose 0.2%, with the indexes for eggs (+7.7% MoM; +35.3% YoY) and for fruits and vegetables rising notably.

The index for all items less food and energy increased 0.1% in August, unchanged from July. The index for shelter rose (rent: +0.3% MoM; owners’ equivalent rent: +0.2% MoM), as did the indexes for apparel, tobacco, and alcoholic beverages. However the index for airline fares declined sharply, and the indexes for household furnishings and operations, recreation, and used cars and trucks also decreased, with the indexes for new vehicles and medical care unchanged.

The all items index increased 0.2% for the 12 months ending August, unchanged from the 12 months ending July. The 12-month change in the index for all items less food and energy also remained the same, at 1.8% for the 12 months ending August. The food index rose 1.6% over the last 12 months, while the energy index declined 15.0%.

The seasonally adjusted Producer Price Index for final demand (PPI) was unchanged in August (-0.2% expected), as a 0.4% increase in the index for final demand services offset a 0.6% decrease in prices for final demand goods. The final demand index moved down 0.8% for the 12 months ended in August, the seventh straight year-over-year decline.

Final demand services: The index for final demand services moved up 0.4% in August, the third consecutive rise. Three-quarters of the advance can be traced to a 0.9% increase in the index for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) Almost half of the August advance in the index for final demand services is attributable to margins for apparel, footwear, and accessories retailing (likely related to back-to-school retail staffing), which jumped 7.0%.

Final demand goods: The index for final demand goods fell 0.6%, the largest decline since April’s -0.6%. The decrease is mostly attributable to a 3.3% drop in prices for final demand energy (especially -7.7% in the gasoline index). The index for final demand goods less foods and energy moved down 0.2%. Conversely, prices for final demand foods rose 0.3% (especially a 23.2% surge in the eggs index). 

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The price indexes we track were either unchanged month-over-month in August but all fell on a year-over-year basis. 

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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.