November 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 0.2% (as expected) in November. The shelter and gasoline indexes continued to rise in November, and were again the main reasons for the seasonally adjusted all items increase. The shelter index advanced 0.3% in November, while the gasoline index increased 2.7%.

The food index was unchanged in November, as the index for food at home fell 0.1%, its seventh consecutive decline. The energy index increased 1.2%, although gasoline was the only major energy component index to increase over the month. 

The index for all items less food and energy rose 0.2% in November after rising 0.1% in October. The shelter index accounted for most of the increase, but the indexes for motor vehicle insurance, education, communication, and used cars and trucks also rose. The medical care index was unchanged over the month. Several indexes declined in November, including apparel, household furnishings and operations, airline fares, and new vehicles. 

The all items index rose 1.7% for the 12 months ending November; the 12-month all items increase has been rising since it was 0.8% in July. The index for all items less food and energy rose 2.1% for the 12 months ending November, and the energy index increased 1.1%. In contrast, the food index declined 0.4% over the last 12 months.

Producer Price Index

The seasonally adjusted producer price index for final demand (PPI) increased 0.4% (+0.2% expected) in November. Final demand prices were unchanged in October and advanced 0.3% in September. In November 2016, over 80% of the advance in the final demand index is attributable to a 0.5% rise in prices for final demand services. The index for final demand goods increased 0.2%.

Prices for final demand less foods, energy, and trade services moved up 0.2% in November after edging down 0.1% in October. On an unadjusted basis, the final demand index climbed 1.3% for the 12 months ended November 2016, the largest rise since moving up 1.3% for the 12 months ended November 2014. For the 12 months ended in November, the index for final demand less foods, energy, and trade services climbed 1.8%, the largest rise since advancing 1.8% for the 12 months ended August 2014.

Final Demand

Final demand services: The index for final demand services moved up 0.5% in November, the largest rise since increasing 0.9% in January 2016. Over 80% of the November advance can be traced to margins for final demand trade services, which climbed 1.3%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services both inched up 0.1%.

Product detail: A quarter of the November increase in prices for final demand services is attributable to margins for apparel, jewelry, footwear, and accessories retailing, which advanced 4.2%. The indexes for fuels and lubricants retailing; machinery, equipment, parts, and supplies wholesaling; food and alcohol retailing; food and alcohol wholesaling; and inpatient care also moved higher. In contrast, prices for guestroom rental fell 3.3%. The indexes for cleaning supplies and paper products retailing and for portfolio management also decreased. (See table 4.)

Final demand goods: Prices for final demand goods moved up 0.2% in November following a 0.4% increase in October. Leading the November advance, the index for final demand goods less foods and energy rose 0.2%. Prices for final demand foods also moved higher, climbing 0.6%. Conversely, the index for final demand energy declined 0.3%.

Product detail: In November, prices for iron and steel scrap jumped 11.4%. The indexes for beef and veal, fresh fruits and melons, pharmaceutical preparations, electric power, and cigarettes also increased. In contrast, gasoline prices fell 2.9%. The indexes for fresh and dry vegetables and for light motor trucks also decreased. 

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The not-seasonally adjusted price indexes we track were mixed on a MoM basis, but all positive on a YoY 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.