September 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 0.3% in September (+0.3% expected). Increases in the shelter and gasoline indexes were the main causes of the rise in the all-items index. The gasoline index rose 5.8% in September and accounted for more than half of the all items increase. The shelter index increased 0.4%, its largest increase since May.

The energy index increased 2.9%, its largest advance since April. Along with the gasoline index, other energy component indexes also rose. The index for food, in contrast, was unchanged for the third consecutive month, as the food at home index continued to decline.

The index for all items less food and energy rose 0.1% in September after a 0.3% increase in August. Along with the shelter index, the indexes for medical care, motor vehicle insurance, and personal care all increased in September, as did the indexes for education, alcoholic beverages, airline fares, and tobacco. The indexes for communication, apparel, used cars and trucks, recreation, and new vehicles all declined.  

The all items index rose 1.5% for the 12 months ending September, its largest 12-month increase since October 2014. The index for all items less food and energy rose 2.2% for the 12 months ending September. The food index declined 0.3% over the span, and the energy index fell 2.9%. Rent increased 3.7%, and medical services +4.8%.

Producer Price Index

The seasonally adjusted producer price index for final demand (PPI) rose 0.3% in September, (+0.2% expected). Final demand prices were unchanged in August and declined 0.4% in July. In September, over three-quarters of the advance in final demand prices can be traced to a 0.7% increase in the final demand goods index. Prices for final demand services inched up 0.1%. The index for final demand less foods, energy, and trade services moved up 0.3% in September, the same as in August.

The final demand index increased 0.7% for the 12 months ended in September, the largest 12-month rise since December 2014’s +0.9%. For the 12 months ended in September, prices for final demand less foods, energy, and trade services rose 1.5%, the largest increase since climbing 1.5% for the 12 months ended November 2014.

Final Demand

Final demand goods: The index for final demand goods advanced 0.7% in September following a 0.4% decline in August. Over 60% of the broad-based rise can be attributed to a 2.5% increase in prices for final demand energy. The index for final demand goods less foods and energy moved up 0.3%, and prices for final demand foods advanced 0.5%.

Product detail: Thirty percent of the September rise in the index for final demand goods can be traced to a 5.3% increase in gasoline prices. The indexes for pharmaceutical preparations, fresh and dry vegetables, diesel fuel, jet fuel, and residential natural gas also moved higher. In contrast, prices for beef and veal fell 3.7%. The indexes for carbon steel scrap and asphalt also declined.

Final demand services: In September, prices for final demand services inched up 0.1%, the same as in August. The September advance was led by the index for final demand services less trade, transportation, and warehousing, which rose 0.2%. Prices for final demand transportation and warehousing services increased 1.3%. Conversely, the final demand trade services index decreased 0.4%. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: A major factor in the September rise in the index for final demand services was prices for securities brokerage, dealing, investment advice, and related services, which advanced 3.9%. The indexes for airline passenger services, machinery and equipment wholesaling, food and alcohol retailing, and hospital inpatient care also moved higher. In contrast, margins for apparel, jewelry, footwear, and accessories retailing fell 5.2%. The indexes for guestroom rental, machinery and equipment parts and supplies wholesaling, and apparel wholesaling also declined. 

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The not-seasonally adjusted price indexes we track were mixed on both MoM and YoY bases. 

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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.