September 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 0.5% in September (+0.6% expected). The gasoline index increased 13.1%, accounting for about three-fourths of the seasonally adjusted all-items increase. Other major energy component indexes were mixed, and the food index rose slightly.

The index for all items less food and energy increased 0.1% in September. The shelter index continued to increase, and the indexes for motor vehicle insurance, recreation, education, and wireless telephone services also rose. These increases more than offset declines in the indexes for new vehicles, household furnishings and operations, medical care, and used cars and trucks.

The all items index rose 2.2% for the 12 months ending September; the 12-month change has been accelerating since June’s +1.6% YoY. The 12-month change in the index for all items less food and energy remained at 1.7% for the fifth month in a row. The energy index rose 10.1% over the past 12 months, its largest 12-month increase since the period ending March 2017. The food index increased 1.2% over the last year.

Hurricane Irma had a small impact on data collection in September. Data collection was affected in some areas in Florida.

Producer Price Index

The seasonally adjusted producer price index for final demand (PPI) advanced 0.4% in September (+0.4 expected). Prices for final demand services rose 0.4%, and the index for final demand goods climbed 0.7%. Prices for final demand less foods, energy, and trade services increased 0.2% in September, the same as in August.

The final demand index increased 2.6% for the 12 months ended in September, the YoY largest rise since February 2012’s +2.8%. The index for final demand less foods, energy, and trade services advanced 2.1% YoY.

Hurricanes Harvey and Irma had virtually no impact on data collection efforts or survey response rates, and no changes in estimation procedures were necessary.

Final Demand

Final demand services: The index for final demand services increased 0.4% in September, the largest rise since moving up 0.5% in April. Over 60% of the September advance can be traced to a 0.8% increase in margins for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) The index for final demand transportation and warehousing services jumped 1.0%. Prices for final demand services less trade, transportation, and warehousing edged up 0.1%.

Product detail: Nearly 30% of the increase in prices for final demand services can be attributed to margins for machinery, equipment, parts, and supplies wholesaling, which rose 1.3%. The indexes for apparel, footwear, and accessories retailing; health, beauty, and optical goods retailing; truck transportation of freight; deposit services (partial); and food and alcohol wholesaling also advanced. In contrast, prices for residential real estate loans (partial) fell 2.6%. The indexes for automobiles and automobile parts retailing and for apparel wholesaling also declined.

Final demand goods: Prices for final demand goods rose 0.7% in September, the largest increase since moving up 1.0% in January. Over 80% of the September advance can be traced to the index for final demand energy, which climbed 3.4%. (Higher energy prices were likely the result of reduced refining capacity in the Gulf Coast area due to Hurricane Harvey.) Prices for final demand goods less foods and energy moved up 0.3%. The index for final demand foods was unchanged.

Product detail: Two-thirds of the September increase in the final demand goods index can be attributed to prices for gasoline, which jumped 10.9%. The indexes for jet fuel, motor vehicles, diesel fuel, fresh and dry vegetables, and chicken eggs also moved higher. Conversely, prices for young chickens fell 4.7%. The indexes for electric power and integrated microcircuits also declined. 

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