March 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) decreased 0.1% in March (+0.0% expected). A decline in the gasoline index more than outweighed increases in the indexes for shelter, medical care, and food to result in the slight seasonally adjusted decline in the all items index. The energy index fell sharply due mainly to the 4.9% decrease in the gasoline index. The index for food rose 0.1% over the month, with the indexes for food at home and food away from home both increasing.

The index for all items less food and energy increased 0.2% in March, the same increase as in February. Along with shelter and medical care, the indexes for personal care, motor vehicle insurance, and airline fares all rose. The indexes for apparel, for communication, and for used cars and trucks all declined over the month.

The all items index rose 2.4% for the 12 months ending March, the largest 12-month increase since the period ending March 2017 and higher than the 1.6% average annual rate over the past 10 years. The index for all items less food and energy rose 2.1%, its largest 12-month increase since the period ending February 2017. The energy index increased 7.0% over the past 12 months, and the food index advanced 1.3%. 

Producer Price Index

The Producer Price Index for final demand (PPI) advanced 0.3% in March (+0.1% expected). Final demand prices rose 0.2% in February and 0.4% in January. Roughly 70% of the rise in the final demand index is attributable to a 0.3% advance in prices for final demand services. The index for final demand goods also climbed 0.3%.

The index for final demand less foods, energy, and trade services rose 0.4% in March, the same as in both February and January. The final demand index increased 3.0% for the 12 months ended in March. Prices for final demand less foods, energy, and trade services increased 2.9% YoY, the largest advance since 12-month% change data were available in August 2014.

Final Demand

Final demand services: Prices for final demand services moved up 0.3% in March, the same as in both February and January. Over 70% of the broad-based advance in March can be traced to the index for final demand services less trade, transportation, and warehousing, which climbed 0.3%. Prices for final demand transportation and warehousing services rose 0.6%, and the index for final demand trade services increased 0.2%. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: A major factor in the March advance in prices for final demand services was the index for outpatient care (partial), which climbed 0.4%. The indexes for machinery, equipment, parts, and supplies wholesaling; cable and satellite subscriber services; airline passenger services; food and alcohol wholesaling; and hospital inpatient care also moved higher. In contrast, margins for automotive fuels and lubricants retailing fell 10.4%. The indexes for apparel, footwear, and accessories retailing and wireless telecommunications services also decreased.

Final demand goods: Prices for final demand goods moved up 0.3% in March after edging down 0.1% in February. Most of the increase can be traced to prices for final demand foods, which advanced 2.2%. The index for final demand goods less foods and energy climbed 0.3%. Conversely, prices for final demand energy declined 2.1%.

Product detail: Over half of the March increase in the index for final demand goods is attributable to a 31.5% jump in prices for fresh and dry vegetables. The indexes for chicken eggs, meats, unprocessed finfish, motor vehicles, and iron and steel scrap also advanced. In contrast, prices for gasoline fell 3.7%. The indexes for primary basic organic chemicals and for fresh fruits and melons also moved lower. 

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Only Intermediate Materials’ not-seasonally adjusted price index decreased on a MoM 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.