April 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 0.2% (as expected) in April. Increases in indexes for shelter (0.3%), energy, tobacco, and food all contributed to the monthly increase in the all items index. The energy index rose 1.1%, with all 3 of its major component indexes rising. The food index rose 0.2%, mostly due to a sharp increase in the index for fresh vegetables.

The all items index rose 2.2% for the 12 months ending April. While a smaller increase than March’s 2.4% YoY rise, this is still a larger rise than the 1.7% average annual increase over the past 10 years. The index for all items less food and energy rose 1.9% over the last 12 months; this compares to a 1.8% average annual increase over the past decade. The energy index rose 9.3% over the last year, while the food index increased 0.5%; rent: +3.8% and medical care services: +3.1%.

Producer Price Index

The seasonally adjusted producer price index for final demand (PPI) advanced 0.5% in April. Final demand prices edged down 0.1% in March and climbed 0.3% in February. On an unadjusted basis, the final demand index rose 2.5% for the 12 months ended April 2017, the largest increase since moving up 2.8% for the 12 months ended February 2012.

In April, almost two-thirds of the advance in the final demand index is attributable to prices for final demand services, which moved up 0.4%. The index for final demand goods climbed 0.5%.

Prices for final demand less foods, energy, and trade services increased 0.7% in April. For the 12 months ended in April, the index for final demand less foods, energy, and trade services climbed 2.1%.

Final Demand

Final demand services: The index for final demand services moved up 0.4% in April after edging down 0.1% in March. Most of the increase can be traced to prices for final demand services less trade, transportation, and warehousing, which advanced 0.8%. The index for final demand transportation and warehousing services increased 0.7%. Conversely, margins for final demand trade services moved down 0.3%. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: Over a quarter of the April advance in the index for final demand services is attributable to prices for securities brokerage, dealing, investment advice, and related services, which increased 6.6%. The indexes for guestroom rental; loan services (partial); machinery, equipment, parts, and supplies wholesaling; portfolio management; and airline passenger services also moved higher. In contrast, margins for fuels and lubricants retailing dropped 14.6%. The indexes for food and alcohol retailing and for deposit services (partial) also fell.

Final demand goods: Prices for final demand goods increased 0.5% in April following a 0.1% decline in March. Nearly 40% of the broad-based advance can be attributed to the index for final demand goods less foods and energy, which rose 0.3%. The indexes for final demand foods and final demand energy climbed 0.9% and 0.8%, respectively.

Product detail: In April, the index for cigarettes moved up 2.2%. Prices for gasoline, fresh and dry vegetables, fresh fruits and melons, residential natural gas, and pharmaceutical preparations also advanced. Conversely, the index for jet fuel fell 6.1%. Prices for carbon steel scrap and oilseeds also declined. 

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All of the not-seasonally adjusted price indexes we track either were unchanged or 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.