June 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) was unchanged in June (+0.1% expected). The energy index declined again in June, falling 1.6%; this offset an increase in the index for all items less food and energy. All the major energy component indexes declined, with the gasoline index falling 2.8%. The food index was unchanged in June, with the index for food at home declining slightly as five of the six major grocery store food group indexes decreased. 

The index for all items less food and energy rose 0.1% in June, its third straight such increase. The shelter index continued to rise, and the indexes for medical care, motor vehicle insurance, education, and personal care also increased. The indexes for airline fares, used cars and trucks, wireless telephone services, and new vehicles were among the indexes that declined in June. 

The all items index rose 1.6% for the 12 months ending June; this measure has been declining steadily since February, when it was 2.7%. The index for all items less food and energy rose 1.7% for the 12 months ending June, the same increase as for the 12 months ending May. The energy index rose 2.3% over the last year, while the food index increased 0.9%. Rent rose 3.9% YoY; health insurance: +1.7%.

Producer Price Index

The seasonally adjusted producer price index for final demand (PPI) increased 0.1% in June (0.0 expected). Final demand prices were unchanged in May and rose 0.5% in April. In June, almost 80% of the rise in the final demand index is attributable to prices for final demand services, which increased 0.2%. The index for final demand goods edged up 0.1%.

The final demand index advanced 2.0% for the 12 months ended in June. Prices for final demand less foods, energy, and trade services increased 0.2% in June. For the 12 months ended in June, the index for final demand less foods, energy, and trade services advanced 2.0%.

Final Demand

Final demand services: Prices for final demand services moved up 0.2% in June, the fourth consecutive increase. Most of the June rise can be attributed to a 0.3% advance in the index for final demand services less trade, transportation, and warehousing. Prices for final demand transportation and warehousing services edged up 0.1%. In contrast, the index for final demand trade services moved down 0.2%. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: A major factor in the June increase in the index for final demand services was prices for securities brokerage, dealing, investment advice, and related services, which rose 4.0%. The indexes for machinery and equipment wholesaling, loan services (partial), insurance, inpatient care, and truck transportation of freight also advanced. Conversely, margins for apparel, footwear, and accessories retailing declined 3.7%. The indexes for motor vehicle maintenance and repair (partial) and for airline passenger services also fell.

Final demand goods: Prices for final demand goods edged up 0.1% in June, after falling 0.5% in the previous month. Most of the June advance can be attributed to the index for final demand foods, which climbed 0.6%. Prices for final demand goods less foods and energy inched up 0.1%. In contrast, the index for final demand energy declined 0.5%.

Product detail: Leading the June advance in the index for final demand goods, prices for meats increased 5.5%. The indexes for pharmaceutical preparations, light motor trucks, young chickens, potatoes, and butter also moved higher. Conversely, prices for gasoline moved down 1.1%. The indexes for fresh vegetables (except potatoes), plastic resins and materials, and unprocessed finfish also fell. 

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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.