March 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) decreased 0.3% (0.0% expected) in March, the first month-over-month (MoM) decrease in the seasonally adjusted all items index since February 2016. A 6.2% decline in the gasoline index was the largest factor, with a decrease in the index for wireless telephone services also contributing. The energy index declined 3.2%, with the gasoline index falling 6.2%, and other major energy component indexes decreasing as well. The food index rose 0.3%, with the index for food at home increasing 0.5%, its largest increase since May 2014.

The index for all items less food and energy fell 0.1% in March, its first decline since January 2010. The shelter index rose 0.1%, and the indexes for motor vehicle insurance, medical care, tobacco, airline fares, and alcoholic beverages also increased in March. These increases were more than offset by declines in several indexes, including those for wireless telephone services, used cars and trucks, new vehicles, and apparel.

The all items index rose 2.4% for the 12 months ending March (YoY), a smaller increase than the 2.7% rise for the period ending February. The index for all items less food and energy rose 2.0% over the last 12 months, the smallest 12-month increase since November 2015. The energy index rose 10.9% over the last year, while the food index increased 0.5%; rent: +3.9% and medical care services: +3.4%.

Producer Price Index

The seasonally adjusted producer price index for final demand (PPI) declined 0.1% (+0.0% expected) in March. Three-fourths of the decrease in the final demand index is attributable to prices for final demand services, which fell 0.1%. The index for final demand goods also inched down 0.1%.

On an unadjusted basis, the final demand index rose 2.3% for the 12 months ended March 2017, the largest increase since moving up 2.4% for the 12 months ended March 2012. Prices for final demand less foods, energy, and trade services edged up 0.1% in March, the tenth straight advance. For the 12 months ended in March, the index for final demand less foods, energy, and trade services climbed 1.7%.

Final Demand

Final demand services: The index for final demand services inched down 0.1% in March following a 0.4% increase in February. Over half of the broad-based decline can be traced to prices for final demand services less trade, transportation, and warehousing, which decreased 0.1%. Margins for final demand trade services also edged down 0.1%. (Trade indexes measure changes in margins received by wholesalers and retailers.) The index for final demand transportation and warehousing services fell 0.2%.

Product detail: A 4.1% drop in the index for loan services (partial) led the March decline in prices for final demand services. The indexes for apparel, footwear, and accessories retailing; securities brokerage, dealing, and investment advice; health, beauty, and optical goods retailing; and truck transportation of freight also moved lower. In contrast, margins for fuels and lubricants retailing jumped 13.8%. The indexes for food and alcohol retailing, machinery and equipment parts and supplies wholesaling, and insurance also advanced.

Final demand goods: The index for final demand goods inched down 0.1% in March following 6 straight increases. The decline can be traced to a 2.9% drop in prices for final demand energy. Conversely, the indexes for final demand goods less foods and energy and for final demand foods rose 0.4% and 0.9%, respectively.

Product detail: Leading the March decrease in prices for final demand goods, the gasoline index fell 8.3%. Prices for liquefied petroleum gas; jet fuel; hay, hayseeds, and oilseeds; and integrated microcircuits also moved lower. In contrast, the index for motor vehicles rose 0.9%. Prices for meats, processed poultry, and electric power also advanced. 

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All of the not-seasonally adjusted price indexes we track rose 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.