August 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) rose 0.4% in August (+0.4% expected). Increases in the indexes for gasoline and shelter accounted for nearly all of the MoM increase in the all items index. The energy index rose 2.8% in August as the gasoline index increased 6.3%. The shelter index rose 0.5% in August with the rent index up 0.4%. The food index rose slightly in August, with the index for food away from home increasing and the food at home index declining.

The index for all items less food and energy rose 0.2% in August. Along with the shelter index, the indexes for motor vehicle insurance, medical care, and recreation all increased in August. The indexes for airline fares and for used cars and trucks were among those that declined in August. 

The all items index rose 1.9% for the 12 months ending August (up from +1.7% YoY in July). The 12-month change in the index for all items less food and energy remained at 1.7% for the fourth month in a row. It has remained in the range of 1.6% to 2.3% since June 2011. The energy index rose 6.4% over the past 12 months, and the food index increased 1.1%.

Producer Price Index

The seasonally adjusted producer price index for final demand (PPI) advanced 0.2% in August (+0.3 expected). Three-quarters of the August increase in final demand prices is attributable to the index for final demand goods, which climbed 0.5%. Prices for final demand services inched up 0.1%.

On an unadjusted basis, the final demand index increased 2.4% for the 12 months ended in August. The index for final demand less foods, energy, and trade services increased 0.2% in August following no change in July. For the 12 months ended in August, prices for final demand less foods, energy, and trade services rose 1.9%.

Final Demand

Final demand goods: Prices for final demand goods advanced 0.5% in August, the largest rise since moving up 0.5% in April. Most of the August increase can be traced to the index for final demand energy, which climbed 3.3%. Prices for final demand goods less foods and energy moved up 0.2%. In contrast, the index for final demand foods fell 1.3%.

Product detail: Three-quarters of the August increase in the final demand goods index can be traced to prices for gasoline, which jumped 9.5%. The indexes for jet fuel, industrial chemicals, potatoes, home heating oil, and light motor trucks also moved higher. Conversely, prices for meats fell 3.4%. The indexes for fresh vegetables (except potatoes) and for plastic resins and materials also declined.

Final demand services: The index for final demand services edged up 0.1% in August after falling 0.2% in July. Over 70% of the increase can be traced to a 0.1% advance in the index for final demand services less trade, transportation, and warehousing. Additionally, prices for final demand transportation and warehousing services climbed 0.3%. Margins for final demand trade services were unchanged. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: Over half of the August increase in the index for final demand services can be attributed to prices for consumer loans (partial), which advanced 1.7%. The indexes for outpatient care (partial), machinery and equipment wholesaling, truck transportation of freight, and food retailing also moved higher. In contrast, margins for fuels and lubricants retailing fell 6.8%. The indexes for chemicals and allied products wholesaling, guestroom rental, and airline passenger services also declined. 

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Virtually 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.