February 2018 Consumer and Producer Price Indices (incl. Forest Products)

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Consumer Price Index

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2% in February (+0.2% expected). The indexes for shelter, apparel, and motor vehicle insurance all rose and contributed to the seasonally adjusted increase in the all items index. The food index was unchanged in February, as a decline in the index for food at home offset an increase in the food away from home index. The energy index increased slightly, with its component indexes mixed.

The index for all items less food and energy increased 0.2% in February following a 0.3% increase in January. Along with shelter, apparel, and motor vehicle insurance, the indexes for household furnishings and operations, education, personal care, and airline fares also increased in February. In contrast, the indexes for communication, new vehicles, medical care, and used cars and trucks declined over the month.

The all items index rose 2.2% for the 12 months ending February, a slightly larger increase than the 2.1% rise for the 12 months ending January. The index for all items less food and energy rose 1.8% over the past year, while the energy index increased 7.7% and the food index advanced 1.4%. 

Producer Price Index

The Producer Price Index for final demand advanced 0.2% in February (+0.2% expected). Final demand prices rose 0.4% in January and were unchanged in December. In February, the rise in final demand prices is attributable to a 0.3% advance in the index for final demand services. In contrast, prices for final demand goods edged down 0.1%. 

The final demand index increased 2.8% for the 12 months ended in February.  The index for final demand less foods, energy, and trade services climbed 0.4% in February, the same as in January. For the 12 months ended in February, prices for final demand less foods, energy, and trade services increased 2.7%, the largest rise since 12 month percent-change data were available in August 2014. 

Final Demand

Final demand services: Prices for final demand services moved up 0.3% in February, the same as in January. Most of the February advance can be traced to the index for final demand services less trade, transportation, and warehousing, which increased 0.3%. Prices for final demand transportation and warehousing services also moved higher, rising 0.9%. Conversely, margins for final demand trade services declined 0.2%. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: A major factor in the February advance in prices for final demand services was the index for traveler accommodation services, which climbed 3.7%. The indexes for automotive fuels and lubricants retailing, food retailing, bundled wired telecommunications access services, hospital inpatient care, and airline passenger services also moved higher. In contrast, margins for machinery, equipment, parts, and supplies wholesaling fell 1.4%. The indexes for apparel, jewelry, footwear, and accessories retailing and for cable and satellite subscriber services also decreased.

Final demand goods: Prices for final demand goods edged down 0.1% in February, the first decline since falling 0.5% in May 2017. In February, a 0.4% decrease in the index for final demand foods and a 0.5% decline in prices for final demand energy slightly outweighed a 0.2% increase in the index for final demand goods less foods and energy.

Product detail: Leading the February decrease in the index for final demand goods, prices for fresh and dry vegetables dropped 27.1%. The indexes for gasoline, light motor trucks, diesel fuel, and liquefied petroleum gas also moved lower. Conversely, prices for primary basic organic chemicals jumped 7.2%. The indexes for chicken eggs, residential natural gas, and beef and veal also advanced. 

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No not-seasonally adjusted price index we track decreased on either a MoM or YoY basis. 

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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.