October 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 0.3% in October (+0.3% expected). An increase in the gasoline index was responsible for over one-third of the seasonally adjusted increase in the all-items index; advances in the indexes for shelter, used cars and trucks, and electricity also contributed. The increases in the gasoline and electricity indexes led to a 2.4% rise in the energy index. The food index, in contrast, declined slightly in October.

The index for all items less food and energy rose 0.2% in October following a 0.1% increase in September. Along with the indexes for shelter and for used cars and trucks, the indexes for medical care, household furnishings and operations, motor vehicle insurance, and tobacco all increased in October. The indexes for communication, new vehicles, and recreation all declined.

The all-items index rose 2.5% for the 12 months ending October, a larger increase than the 2.3% increase for the 12 months ending September. The index for all items less food and energy rose 2.1% for the 12 months ending October. The energy index increased 8.9%, while the food index increased more modestly, advancing 1.2% over the last 12 months.

Producer Price Index

The Producer Price Index for final demand (PPI) rose 0.6% in October (+0.2% expected). Final demand prices advanced 0.2% in September and declined 0.1% in August. In October, over 60% of the rise in final demand prices can be traced to a 0.7% advance in the index for final demand services. Prices for final demand goods moved up 0.6%.

On an unadjusted basis, the final demand index increased 2.9% for the 12 months ended in October. The index for final demand less foods, energy, and trade services rose 0.2% in October after climbing 0.4% in September. For the 12 months ended in October, prices for final demand less foods, energy, and trade services advanced 2.8%.

Final Demand

Final demand services: The index for final demand services increased 0.7% in October, the largest advance since climbing 0.8% in January 2016. Nearly three-fourths of the broad-based October rise can be traced to margins for final demand trade services, which moved up 1.6%. (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 increased 0.2% and 0.6%, respectively.

Product detail: About one-fifth of the October advance in prices for final demand services is attributable to a 1.2% rise in margins for machinery, equipment, parts, and supplies wholesaling. The indexes for food and alcohol retailing; health, beauty, and optical goods retailing; inpatient care; apparel, jewelry, footwear, and accessories retailing; and traveler accommodation services also moved higher. In contrast, prices for loan services (partial) fell 0.5%. The indexes for hospital outpatient care and furniture retailing also declined.

Final demand goods: The index for final demand goods climbed 0.6% in October, the largest rise since advancing 0.9% in May. Nearly three-fourths of the October increase can be traced to prices for final demand energy, which moved up 2.7%. The index for final demand foods rose 1.0%. Prices for final demand goods less foods and energy were unchanged. 

Product detail: Over 60% of the October increase in prices for final demand goods is attributable to the gasoline index, which jumped 7.6%. Prices for diesel fuel, fresh and dry vegetables, beef and veal, cigarettes, and jet fuel also moved higher. Conversely, the motor vehicles index fell 0.7%. Prices for liquefied petroleum gas and for fresh fruits and melons also decreased. 

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The not-seasonally adjusted price indexes we track were mixed on both a MoM and YoY basis. 

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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.