January 2018 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 0.5% in January (+0.3% expected). The increase in the all items index was broad-based, with increases in the indexes for gasoline, shelter, apparel, medical care, and food all contributing. The energy index rose 3.0% in January, with the increase in the gasoline index more than offsetting declines in other energy component indexes. The food index rose 0.2% with the indexes for food at home and food away from home both rising.

The index for all items less food and energy increased 0.3% in January. Along with shelter, apparel, and medical care, the indexes for motor vehicle insurance, personal care, and used cars and trucks also rose in January. The indexes for airline fares and new vehicles were among those that declined over the month.   

The all items index rose 2.1% for the 12 months ending January, the same increase as for the 12 months ending December. The index for all items less food and energy rose 1.8% over the past year, while the energy index increased 5.5% and the food index advanced 1.7%. 

Producer Price Index

The seasonally adjusted producer price index for final demand (PPI) increased 0.4% in January (+0.4 expected). Final demand prices were unchanged in December and moved up 0.4% in November. On an unadjusted basis, the final demand index rose 2.7% for the 12 months ended in January.

In January, the rise in the index for final demand is attributable to a 0.3-percent increase in prices for final demand services and a 0.7-percent advance in the index for final demand goods.

The index for final demand less foods, energy, and trade services rose 0.4% in January, the largest advance since increasing 0.5% in April 2017. For the 12 months ended in January, prices for final demand less foods, energy, and trade services moved up 2.5%, the largest rise since 12-month percent change data were available in August 2014.

Final Demand

Final demand services: Prices for final demand services advanced 0.3% in January following a 0.1-percent decline a month earlier. Nearly two-thirds of the broad-based increase is attributable to the index for final demand services less trade, transportation, and warehousing, which moved up 0.4%. Margins for final demand trade services rose 0.3%, and prices for final demand transportation and warehousing services advanced 0.4%. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: A major factor in the January increase in prices for final demand services was the index for hospital outpatient care, which rose 1.0%. The indexes for apparel, footwear, and accessories retailing; health, beauty, and optical goods retailing; residential real estate services (partial); long-distance motor carrying; and hospital inpatient care also moved higher. In contrast, margins for chemicals and allied products wholesaling declined 2.3%. Prices for wireless telecommunication services and airline passenger services also fell.

Final demand goods: The index for final demand goods jumped 0.7% in January, the sixth consecutive increase. Over 80% of the January advance can be traced to prices for final demand energy, which climbed 3.4%. The index for final demand goods less foods and energy rose 0.2%. Conversely, prices for final demand foods fell 0.2%.

Product detail: Nearly half of the January increase in the index for final demand goods is attributable to prices for gasoline, which climbed 7.1%. The indexes for residential electric power, iron and steel scrap, diesel fuel, jet fuel, and fresh and dry vegetables also moved higher. In contrast, prices for chicken eggs fell 38.9%. The indexes for residential natural gas and for power cranes, draglines, and shovels also declined. 

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The not-seasonally adjusted price indexes we track all increased 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.