September 2018 Consumer and Producer Price Indices (incl. Forest Products)

Click image for larger version

Consumer Price Index

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1% in September (+0.2% expected). The shelter index continued to rise (+0.2%) and accounted for over half of the seasonally adjusted monthly increase in the all-items index. The energy index declined 0.5% in September after rising in August. The food index was unchanged in September, as an increase in the index for food away from home offset a decline in the food at home index.  

The index for all items less food and energy rose 0.1% in September, the same increase as in August. The shelter index increased 0.2%, and the indexes for apparel, motor vehicle insurance, recreation, and airline fares also rose. The medical care index increased as well, though its components were mixed. The index for used cars and trucks, which fell sharply, and the new vehicles index were among the indexes that declined in September. 

The all-items index rose 2.3% for the 12 months ending September, a smaller increase than the 2.7% increase for the 12 months ending August. The energy index rose 4.8% over the last year, a notably smaller increase than the 10.2% increase for the 12 month period ending August. The index for all items less food and energy rose 2.2% for the 12 months ending September and the food index increased 1.4%; these were both the same rate of increase as for the 12 months ending August. 

Producer Price Index

The Producer Price Index for final demand (PPI) increased 0.2% in September (+0.2% expected). Final demand prices declined 0.1% in August and were unchanged in July. In September, the rise in the final demand index can be traced to a 0.3% increase in prices for final demand services. In contrast, the index for final demand goods decreased 0.1%. The index for final demand less foods, energy, and trade services moved up 0.4% in September, the largest rise since a 0.5% increase in January.

On an unadjusted basis, the final demand index advanced 2.6% for the 12 months ended in September. For the 12 months ended in September, prices for final demand less foods, energy, and trade services advanced 2.9%.

Final Demand

Final demand services: The index for final demand services increased 0.3% in September following two consecutive declines of 0.1%. The broad-based advance was led by a 1.8% jump in the index for final demand transportation and warehousing services. Prices for final demand services less trade, transportation, and warehousing rose 0.3%, and the index for final demand trade services inched up 0.1%. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: In September, over one-third of the advance in prices for final demand services can be traced to the index for airline passenger services, which rose 5.5%. The indexes for food and alcohol wholesaling; deposit services (partial); outpatient care (partial); apparel wholesaling; and lawn, garden, farm equipment, and supplies retailing also moved higher. Conversely, margins for apparel, jewelry, footwear, and accessories retailing fell 2.5%. The indexes for automotive fuels and lubricants retailing and for traveler accommodation services also declined.

Final demand goods: The index for final demand goods edged down 0.1% in September, the first decrease since a 0.5% drop in May 2017. Leading the September decline, prices for final demand energy fell 0.8%. The index for final demand foods decreased 0.6%. In contrast, prices for final demand goods less foods and energy rose 0.2%.

Product detail: Leading the September decline in the index for final demand goods, gasoline prices fell 3.5%. The indexes for electric power; iron and steel scrap; canned, cooked, smoked, or prepared poultry; and fresh and dry vegetables also moved down. Conversely, the index for light motor trucks rose 0.8%. Prices for liquefied petroleum gas, pharmaceutical preparations, and unprocessed and prepared seafood also increased. 

Click image for larger version

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

Click image for larger version

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.