June 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 0.1% in June (+0.2% expected) after rising 0.2% in May. The indexes for shelter, gasoline, and food all rose to lead to the seasonally adjusted increase in the all items index. The food index increased 0.2% in June, with the indexes for food at home and food away from home both rising 0.2%. Despite a 0.5% increase in the gasoline index, the energy index declined 0.3%, with the indexes for electricity and natural gas both falling.

The index for all items less food and energy rose 0.2% in June. The shelter index rose 0.1%, and the indexes for medical care, used cars and trucks, new vehicles, and recreation all increased. The indexes for apparel, airline fares, and household furnishings and operations all declined in June.

The all items index rose 2.9% for the 12 months ending June; this was the largest 12-month increase since the period ending February 2012. The index for all items less food and energy rose 2.3% for the 12 months ending June. The food index increased 1.4%, and the energy index rose 12.0%, its largest 12-month increase since the period ending February 2017.

Producer Price Index

The Producer Price Index for final demand (PPI) rose 0.3% in June (+0.2% expected). Final demand prices advanced 0.5% in May and 0.1% in April. In June, most of the rise in the index for final demand is attributable to a 0.4% advance in prices for final demand services. The index for final demand goods edged up 0.1%. Prices for final demand less foods, energy, and trade services moved up 0.3% in June after rising 0.1% in May.

The final demand index moved up 3.4% for the 12 months ended in June, the largest 12-month increase since climbing 3.7% in November 2011; the index for final demand less foods, energy, and trade services climbed 2.7%.

Final Demand

Final demand services: Prices for final demand services moved up 0.4% in June, the largest advance since a 0.5% rise in January. In June, half of the broad-based increase in the index for final demand services can be traced to margins for final demand trade services, which climbed 0.7%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services rose 0.3% and 0.5%, respectively.

Product detail: Over 40% of the advance in the index for final demand services is attributable to a 21.8% jump in the index for fuels and lubricants retailing. The indexes for hospital outpatient care; health, beauty, and optical goods retailing; truck transportation of freight; automobiles and automobile parts retailing; and food retailing also moved higher. Conversely, prices for apparel, footwear, and accessories retailing declined 2.9%. The indexes for inpatient care and airline passenger services also decreased.

Final demand goods: Prices for final demand goods edged up 0.1% in June following a 1.0% rise in May. Leading the June increase, the index for final demand goods less foods and energy advanced 0.3%. Prices for final demand energy climbed 0.8%. In contrast, the index for final demand foods fell 1.1%.

Product detail: A major factor in the June increase in prices for final demand goods was the index for motor vehicles, which moved up 0.4%. Prices for diesel fuel, electric power, industrial chemicals, and fresh fruits and melons also advanced. Conversely, prices for fresh and dry vegetables dropped 13.8%. The indexes for corn, pharmaceutical preparations, and residential natural gas also moved lower. 

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All of the not-seasonally adjusted price indexes we track 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.