January 2017 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 0.6% in January (+0.3% expected) -- the largest MoM jump since February 2013. A sharp rise in the gasoline index (+7.8%) accounted for nearly half the increase, and advances in the indexes for shelter (rent: +0.3%), apparel, and new vehicles also were major contributors.

The all-items index rose 2.5% for the 12 months ending January, the largest 12-month increase since March 2012. The index for all items less food and energy rose 2.3% YoY, and the energy index increased 10.8%, its largest 12-month increase since November 2011. Rent rose by 3.9% YoY, and medical services: +3.6%.

Producer Price Index

The seasonally adjusted producer price index for final demand (PPI) increased 0.6% in January (+0.3% expected). Over 60% of the advance in the final demand index is attributable to a 1.0% increase in prices for final demand goods. The index for final demand services moved up 0.3%.

The final demand index climbed 1.6% for the 12 months ended January 2017; the index for final demand less foods, energy, and trade services climbed 1.6% YoY.

Final Demand

Final demand goods: Prices for final demand goods moved up 1.0% in January, the largest rise since a 1.0% advance in May 2015. Three-fourths of the January increase can be traced to the index for final demand energy, which jumped 4.7%. Prices for final demand goods less foods and energy climbed 0.4%. The index for final demand foods was unchanged.

Product detail: Over half of the January increase in prices for final demand goods is attributable to the gasoline index, which advanced 12.9%. The indexes for pharmaceutical preparations, iron and steel scrap, home heating oil, residential natural gas, and pork also moved higher. In contrast, prices for beef and veal fell 7.2%. The indexes for light motor trucks and for candy and nuts also decreased.

Final demand services: The index for final demand services rose 0.3% in January after edging up 0.1% in December. Over 80% of the January increase can be traced to margins for final demand trade services, which advanced 0.9%. (Trade indexes measure changes in margins received by wholesalers and retailers.) The index for final demand transportation and warehousing services climbed 1.1%. Conversely, prices for final demand services less trade, transportation, and warehousing inched down 0.1%.

Product detail: Nearly half of the January increase in the index for final demand services can be attributed to margins for apparel, jewelry, footwear, and accessories retailing, which advanced 4.8%. The indexes for fuels and lubricants retailing, loan services (partial), airline passenger services, food and alcohol retailing, and services related to securities brokerage and dealing also moved higher. In contrast, prices for guestroom rental fell 3.3%. The indexes for apparel wholesaling and bundled wired telecommunications access services also decreased. 

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