April 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 April (+0.3% expected). The indexes for gasoline and shelter were the largest factors in the seasonally adjusted increase in the all-items index, although the food index increased as well. The gasoline index increased 3.0%, more than offsetting declines in other energy component indexes and led to a 1.4% rise in the energy index. The food index rose 0.3%, with the food at home index rising 0.3% and the index for food away from home increasing 0.2%.

The index for all items less food and energy rose 0.1% in April. The shelter index rose 0.3%, with other indexes mixed. The indexes for household furnishings and operations, personal care, tobacco, medical care, and apparel all increased in April, while those for used cars and trucks, new vehicles, recreation, and airline fares all declined. 

The all-items index rose 2.5% for the 12 months ending April; this figure has been mostly trending upward since it was 1.6% for the period ending June 2017. The index for all items less food and energy rose 2.1% for the 12 months ending April. The food index increased 1.4%, and the energy index rose 7.9%.

Producer Price Index

The Producer Price Index for final demand (PPI) rose 0.1% in April (+0.3% expected). Final demand prices advanced 0.3% in March and 0.2% in February. In April, the index for final demand services advanced 0.1%, and prices for final demand goods were unchanged.

The final demand index increased 2.6% for the 12 months ended in April. The index for final demand less foods, energy, and trade services edged up 0.1% in April after increasing 0.4% in March. For the 12 months ended in April, prices for final demand less foods, energy, and trade services advanced 2.5%.

Final Demand

Final demand services: Prices for final demand services inched up 0.1% in April, the fourth straight rise. The advance in April was led by the index for final demand trade services, which increased 0.2%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services rose 0.6%. Conversely, the index for final demand services less trade, transportation, and warehousing services declined 0.1%.

Product detail: A major factor in the April advance in prices for final demand services was the index for machinery, equipment, parts, and supplies wholesaling, which climbed 0.9%. The indexes for services related to securities brokerage and dealing (partial), residential real estate loans (partial), airline passenger services, and wireless telecommunication services also moved higher. In contrast, prices for traveler accommodation services fell 3.2%. The indexes for health, beauty, and optical goods retailing; legal services; and apparel wholesaling also decreased.

Final demand goods: Prices for final demand goods were unchanged in April after increasing 0.3% in March. In April, a 0.3% rise in the index for final demand goods less foods and energy and a 0.1% advance in prices for final demand energy offset a 1.1% drop in the index for final demand foods.

Product detail: Among prices for final demand goods in April, the index for tobacco products jumped 2.6%. The indexes for carbon steel scrap; search, detection, navigation, and guidance systems; pharmaceutical preparations; diesel fuel; and prepared poultry products also increased. Conversely, prices for fresh and dry vegetables fell 17.8%. The indexes for chicken eggs, beef and veal, residential electric power, and basic organic chemicals also moved lower. 

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Only the not-seasonally adjusted price indexes for Softwood Lumber and Wood Fiber decreased on a MoM basis. All of the indexes rose YoY. 

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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.