July 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 July (+0.2% expected). The shelter index (+0.3%) accounted for nearly 60% of the seasonally adjusted monthly increase in the all-items index. The food index rose slightly, with major grocery store food group indexes mixed. The energy index fell 0.5%, as all the major component indexes declined.

The index for all items less food and energy rose 0.2% in July, the same increase as in May and June. Along with the shelter index, the indexes for used cars and trucks, airline fares, new vehicles, household furnishings and operations, and recreation all increased. The indexes for medical care and for apparel both declined in July.

The all-items index rose 2.9% for the 12 months ending July, the same increase as for the period ending June. The index for all items less food and energy rose 2.4%; this was the largest YoY increase since the period ending September 2008. The food index increased 1.4% YoY; the energy index: +12.1%. 

Producer Price Index

The Producer Price Index for final demand (PPI) was unchanged in July (+0.3% expected). Final demand prices advanced 0.3% in June and 0.5% in May. In July, a 0.1% rise in the index for final demand goods offset a 0.1% decline in prices for final demand services. The index for final demand less foods, energy, and trade services moved up 0.3% in July, the same as in June.

On an unadjusted basis, the final demand index increased 3.3% for the 12 months ended in July; prices for final demand less foods, energy, and trade services climbed 2.8%.

Final Demand

Final demand goods: The index for final demand goods inched up 0.1% in July, the same as in June. The July advance in prices for final demand goods can be traced to a 0.3% rise in the index for final demand goods less foods and energy. In contrast, prices for final demand energy fell 0.5%, and the index for final demand foods decreased 0.1%.

Product detail: In July, a major factor in the increase in prices for final demand goods was the index for pharmaceutical preparations, which rose 0.7%. Prices for eggs for fresh use, fresh fruits and melons, motor vehicles, and liquefied petroleum gas also moved higher. Conversely, the electric power index fell 1.6%. Prices for meats; hay, hayseeds, and oilseeds; and nonferrous scrap also decreased.

Final demand services: Prices for final demand services edged down 0.1% in July, the first decline since falling 0.2% in December 2017. The July decrease is attributable to the index for final demand trade services, which moved down 0.8%. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, prices for final demand services less trade, transportation, and warehousing and the index for final demand transportation and warehousing services advanced 0.3%.

Product detail: Leading the July decline in prices for final demand services, margins for fuels and lubricants retailing dropped 12.7%. The indexes for machinery and equipment parts and supplies wholesaling, food retailing, hospital outpatient care, and airline passenger services also moved lower. Conversely, prices for guestroom rental climbed 3.9%. The indexes for apparel, jewelry, footwear, and accessories retailing; inpatient care; and truck transportation of freight also increased. 

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The not-seasonally adjusted price indexes we track were mixed on a MoM basis, but all increased 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.