December 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) declined 0.1% in December; consensus expectations were for no change. The indexes for energy (-2.4%) and food (-0.2%) both declined for the second month in a row, leading to the decline in the seasonally adjusted all items index.

The index for all items less food and energy rose 0.1% in December, its smallest increase since August. The index for shelter continued to rise (rent and owner’s equivalent rent: +0.2%), and the indexes for medical care, household furnishings and operations, motor vehicle insurance, education, used cars and trucks, and tobacco also increased in December. However, a number of indexes declined, including those for apparel, airline fares, personal care, new vehicles, and communication.

The all items index rose 0.7% over the last 12 months, compared to the 0.5% 12 month increase for the period ending November. The food index rose 0.8% over the last 12 months, though the index for food at home declined. The energy index fell 12.6%, with all its major components decreasing. The index for all items less food and energy increased 2.1% over the last 12 months. Shelter costs (rent: +3.7%; owner’s equivalent rent: +3.1%) contributed to the YoY rise, along with medical costs (+2.9%).

The seasonally adjusted producer price index for final demand (PPI) decreased 0.2% in December (-0.1% expected). Final demand prices increased 0.3% in November and fell 0.4% in October. On an unadjusted basis, the final demand index fell 1.0% in 2015, after rising 0.9% in 2014.

December’s decrease in the final demand index can be traced to a 0.7% decline in prices for final demand goods, over half of which was attributable to gasoline prices. In contrast, the index for final demand services moved up 0.1% (especially prices for services related to securities brokerage and dealing). 

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Month-over-month changes in nearly all of the not-seasonally adjusted price indexes we track were negative in December, and 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.