October 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 0.1% in October (+0.1% expected). The shelter index increased 0.3% and was the main factor in the seasonally adjusted all-items increase. The energy index fell, as a decline in the gasoline index outweighed increases in other energy component indexes. The food index was unchanged over the month.

The index for all items less food and energy increased 0.2% in October. In addition to the shelter index, the indexes for medical care, used cars and trucks, tobacco, education, motor vehicle insurance, and personal care were among those that increased. The indexes for new vehicles, recreation, and apparel all declined.

The all-items index rose 2.0% for the 12 months ending October, a smaller increase than the 2.2% increase for the period ending September. The index for all items less food and energy rose 1.8% over the past year, a slightly larger increase compared to the 1.7% increase for the 12 months ending September. The energy index increased 6.4% over the last 12 months, and the index for food rose 1.3%. 

Producer Price Index

The seasonally adjusted producer price index for final demand (PPI) increased 0.4% in October (+0.1 expected). Final demand prices advanced 0.4% in September and 0.2% in August. On an unadjusted basis, the final demand index increased 2.8% for the 12 months ended in October, the largest rise since an advance of 2.8% for the 12 months ended February 2012.

Within final demand in October, prices for final demand services rose 0.5%, and the index for final demand goods moved up 0.3%.

Prices for final demand less foods, energy, and trade services rose 0.2% in October. For the 12 months ended in October, the index for final demand less foods, energy, and trade services advanced 2.3%.

Final Demand

Final demand services: The index for final demand services rose 0.5% in October, the largest increase since moving up 0.5% in April. Three-quarters of the October advance can be traced to a 1.1% rise 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 increased 0.8%. Prices for final demand services less trade, transportation, and warehousing edged up 0.1%.

Product detail: Nearly half of the increase in prices for final demand services can be attributed to margins for fuels and lubricants retailing, which surged 24.9%. The indexes for machinery and equipment wholesaling; transportation of passengers (partial); apparel, jewelry, footwear, and accessories retailing; chemicals and allied products wholesaling; and portfolio management also advanced. In contrast, margins for food retailing moved down 2.1%. The indexes for food and alcohol wholesaling and for loan services (partial) also decreased. (See table 4.)

Final demand goods: Prices for final demand goods moved up 0.3% in October, the third straight increase. Over two-thirds of the October rise can be traced to the index for final demand goods less foods and energy, which advanced 0.3%. Prices for final demand foods moved up 0.5%. The index for final demand energy was unchanged.

Product detail: Almost half of the rise in the final demand goods index was the result of higher prices for pharmaceutical preparations, which increased 2.1%. The indexes for industrial chemicals, fresh and dry vegetables, diesel fuel, beef and veal, and tobacco products also advanced. Conversely, prices for gasoline fell 4.6%. The indexes for light motor trucks and pork also moved lower. 

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Not-seasonally adjusted price indexes we track mostly rose on 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.