May 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 May (+0.2% expected). The indexes for gasoline (+1.7% MoM) and shelter (+0.3%) were the largest factors in the seasonally adjusted increase in the all-items index, as they were in April. Combined, they more than offsett declines in some of the other energy component indexes and led to a 0.9% rise in the energy index. The medical care index rose 0.2%. The food index was unchanged over the month.

The index for all items less food and energy rose 0.2% in May. The indexes for new vehicles, education and communication, and tobacco increased in May, while the indexes for household furnishing and operations, and used cars and trucks fell. The indexes for apparel, recreation, and personal care were unchanged.

The all items index rose 2.8% for the 12 months ending May, continuing its upward trend since the beginning of the year; the index for all items less food and energy rose 2.2%. The food index increased 1.2%, and the energy index rose 11.7%.

Producer Price Index

The Producer Price Index for final demand (PPI) rose 0.5% in May (+0.3% expected), after having advanced 0.1% in April and 0.3% in March. In May, 60% of the rise in the index for final demand is attributable to a 1.0% advance in prices for final demand goods. The index for final demand services moved up 0.3%. Prices for final demand less foods, energy, and trade services edged up 0.1% in May, the same as in April.

The final demand index moved up 3.1% for the 12 months ended in May, the largest 12-month increase since climbing 3.1% in January 2012. For the 12 months ended in May, the index for final demand less foods, energy, and trade services climbed 2.6%.

Final Demand

Final demand goods: The index for final demand goods moved up 1.0% in May, the largest advance since a 1.1% rise in May 2015. In May 2018, over 80% of the broad-based increase in prices for final demand goods can be traced to the index for final demand energy, which jumped 4.6%. Prices for final demand goods less foods and energy and for final demand foods rose 0.3% and 0.1%, respectively.

Product detail: Half of the advance in the index for final demand goods is attributable to a 9.8% increase in gasoline prices. The indexes for jet fuel, fresh and dry vegetables, diesel fuel, beef and veal, and light motor trucks also moved higher. In contrast, prices for chicken eggs fell 31.2%. The indexes for residential natural gas and for plastic resins and materials also decreased.

Final demand services: Prices for final demand services moved up 0.3% in May, the fifth consecutive rise. In May, 80% of the advance in the index for final demand services can be traced to margins for final demand trade services, which climbed 0.9%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services increased 0.7%. The index for final demand services less trade, transportation, and warehousing was unchanged.

Product detail: One-third of the May advance in prices for final demand services is attributable to a 1.5% rise in margins for machinery, equipment, parts, and supplies wholesaling. The indexes for chemicals and allied products wholesaling; outpatient care (partial); apparel, footwear, and accessories retailing; food retailing; and truck transportation of freight also moved higher. Conversely, prices for guestroom rental fell 4.4%. The indexes for fuels and lubricants retailing and for hospital inpatient care also moved lower. 

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Only the not-seasonally adjusted price indexes for 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.