April 2016 Consumer and Producer Price Indices (incl. Forest Products)

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Consumer Price Index

The seasonally adjusted consumer price index for all urban consumers (CPI-U) increased 0.4% in April (+0.3% expected). Over the last 12 months, the all items index rose 1.1%.

April’s month-over-month (MoM) all-items increase was broad-based, with the indexes for food, energy, and all items less food and energy all rising. The food index rose 0.2% after declining in March, with the food at home index increasing slightly. The index for energy increased 3.4%, with the gasoline index rising 8.1%, and the indexes for fuel oil and natural gas also advancing.

The index for all items less food and energy increased 0.2% in April. The shelter index rose 0.3%, as did the index for medical care, and the indexes for motor vehicle insurance, airline fares, recreation, and education increased as well. Several other component indexes increased slightly, including those for alcoholic beverages, tobacco, and personal care. In contrast, the indexes for household furnishings and operations, apparel, new vehicles, used cars and trucks, and communication all declined.

The all items index rose 1.1% for the 12 months ending April, a larger increase than the 0.9% increase for the 12 months ending March. The index for all items less food and energy rose 2.1% over the last 12 months, compared to a 2.2% rise for the 12 months ending March. The food index has risen 0.9% over the last 12 months, and the energy index has declined 8.9%. Housing rent has increased 3.7% YoY; medical care costs: +3.1%.

Producer Price Index

The seasonally adjusted producer price index for final demand (PPI) rose 0.2% in April (+0.3% expected). Prices for final demand services edged up 0.1%, and the index for final demand goods advanced 0.2%. The index for final demand less foods, energy, and trade services moved up 0.3% in April following no change in March.

The final demand index was unchanged for the 12 months ended in April; prices for final demand less foods, energy, and trade services rose 0.9%.

Final demand services: The index for final demand services edged up 0.1% in April following a 0.2% decline in March. The increase can be traced to prices for final demand services less trade, transportation, and warehousing, which climbed 0.3%. In contrast, the indexes for final demand transportation and warehousing services and for final demand trade services decreased 0.4% and 0.1%, respectively.

Product detail: A major factor in the April advance in the index for final demand services was prices for portfolio management, which climbed 4.5%. The indexes for fuels and lubricants retailing, residential real estate loans (partial), chemicals and allied products wholesaling, and truck transportation of freight also increased. Conversely, prices for airline passenger services fell 1.7%. The indexes for health, beauty, and optical goods retailing; machinery and equipment wholesaling; and services related to securities brokerage and dealing also moved lower.

Final demand goods: The index for final demand goods advanced 0.2% in April, the same as in March. Most of the April rise can be traced to prices for final demand goods less foods and energy, which climbed 0.3%. The index for final demand energy moved up 0.2%. In contrast, prices for final demand foods declined 0.3%.

Product detail: A contributor to the April increase in prices for final demand goods was the index for carbon steel scrap, which jumped 22.1%. Prices for gasoline, electric power, pharmaceutical preparations, beef and veal, and prepared poultry also advanced. Conversely, prices for chicken eggs dropped 33.9%. The indexes for home heating oil and jet fuel also fell. 

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Of the not-seasonally adjusted price indexes we track, only Wood Fiber declined MoM; only Softwood Lumber rose on a YoY basis, however. 

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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.