January 2019 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) was unchanged in January (+0.1% expected). The energy index declined for the third consecutive month, offsetting increases in the indexes for all items less food and energy and for food. All the major energy component indexes declined in January, with the gasoline index falling 5.5%. The food index increased 0.2%, with the index for food at home rising 0.1% and the food away from home index increasing 0.3%.

The index for all items less food and energy increased 0.2% in January for the fifth consecutive month. The indexes for shelter, apparel, medical care, recreation, and household furnishings and operations were among the indexes that rose in January, while the indexes for airline fares and for motor vehicle insurance declined.  

The all items index increased 1.6% for the 12 months ending January, the smallest increase since the period ending June 2017. The index for all items less food and energy rose 2.2% over the last 12 months, the same increase as the 12 months ending November and December 2018. The food index rose 1.6% over the past year, while the energy index declined 4.8%.

Producer Price Index

The Producer Price Index for final demand edged down 0.1% in January (+0.2% expected). Final demand prices also fell 0.1% in December and inched up 0.1% in November. In January, the decline in the final demand index can be traced to a 0.8% decrease in prices for final demand goods. In contrast, the index for final demand services increased 0.3%.

On an unadjusted basis, the final demand index advanced 2.0% for the 12 months ended in January. The index for final demand less foods, energy, and trade services rose 0.2% in January following no change in December. For the 12 months ended in January, prices for final demand less foods, energy, and trade services moved up 2.5%.

Final Demand

Final demand goods: The index for final demand goods fell 0.8% in January, the largest decrease since dropping 1.2% in September 2015. Over three-quarters of the January decline can be traced to prices for final demand energy, which moved down 3.8%. The index for final demand foods fell 1.7%. Conversely, prices for final demand goods less foods and energy climbed 0.3%.

Product detail: Forty percent of the decrease in the index for final demand goods is attributable to a 7.3% decline in gasoline prices. The indexes for fresh and dry vegetables, diesel fuel, fresh fruits and melons, basic organic chemicals, and jet fuel also moved lower. In contrast, prices for construction machinery and equipment rose 1.7%. The indexes for processed poultry and residential electric power also increased.

Final demand services: The index for final demand services advanced 0.3% in January following no change in December. Over 80% of the rise can be traced to margins for final demand trade services, which increased 0.8%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services climbed 0.5%. The index for final demand services less trade, transportation, and warehousing was unchanged.

Product detail: Half of the advance in prices for final demand services is attributable to margins for apparel, jewelry, footwear, and accessories retailing, which rose 6.3%. The indexes for health, beauty, and optical goods retailing; machinery, equipment, parts, and supplies wholesaling; chemicals and allied products wholesaling; hospital inpatient care; and transportation of passengers (partial) also moved higher. Conversely, prices for portfolio management fell 5.2%. The indexes for automotive fuels and lubricants retailing and for physician care also decreased. 

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