February 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) increased 0.2% in February (+0.2% expected). The indexes for shelter and food increased, and the gasoline index rose after recent declines to result in the seasonally adjusted all items increase. The food index rose 0.4%, its largest monthly increase since May 2014, as both the food at home and food away from home indexes increased. The gasoline index rose 1.5% in February, following three consecutive monthly declines, resulting in the energy index rising 0.4% despite declines in the electricity and natural gas indexes.  

The index for all items less food and energy increased 0.1% in February after rising 0.2% in January. Along with the shelter index, the indexes for personal care, apparel, and education all increased. The indexes for recreation, medical care, used cars and trucks, and new vehicles all declined in February.

The all items index increased 1.5% for the 12 months ending February, a smaller increase than the 1.6% rise for the 12 months ending January. The index for all items less food and energy rose 2.1% over the last 12 months, a slightly smaller figure than the 2.2% increase for the period ending January. The food index rose 2.0% over the past year, its largest 12-month increase since the period ending April 2015. In contrast, the energy index declined 5.0% over the last 12 months.

Producer Price Index

The Producer Price Index for final demand edged up 0.1% in February (+0.2% expected). Final demand prices fell 0.1% in both January and December. On an unadjusted basis, the final demand index moved up 1.9% for the 12 months ended in February.

In February, the increase in the final demand index can be traced to a 0.4% rise in prices for final demand goods. The index for final demand services was unchanged.

The index for final demand less foods, energy, and trade services inched up 0.1% in February following a 0.2% advance in January. For the 12 months ended in February, prices for final demand less foods, energy, and trade services climbed 2.3%.

Final Demand

Final demand goods: The index for final demand goods increased 0.4% in February following three consecutive declines. Over 80% of the advance can be traced to prices for final demand energy, which rose 1.8%. The index for final demand goods less foods and energy edged up 0.1%. Conversely, prices for final demand foods fell 0.3%.

Product detail: Forty percent of the increase in the index for final demand goods is attributable to a 3.3% rise in gasoline prices. The indexes for diesel fuel, jet fuel, integrated microcircuits, residual fuels, and beef and veal also moved higher. In contrast, prices for fresh and dry vegetables declined 12.8%. The indexes for iron and steel scrap and for residential natural gas also decreased.

Final demand services: Prices for final demand services were unchanged in February following a 0.3% rise in January. In February, a 0.3% increase in the index for final demand services less trade, transportation, and warehousing offset a decline of 0.4% in margins for final demand trade services and a 1.3% decrease in the index for final demand transportation and warehousing services. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: In February, prices for traveler accommodation services rose 5.3%. The indexes for machinery, equipment, parts, and supplies wholesaling; food retailing; portfolio management; and legal services also moved higher. Conversely, margins for fuels and lubricants retailing fell 10.5%. The indexes for apparel, jewelry, footwear, and accessories retailing; airline passenger services; health, beauty, and optical goods retailing; and nonresidential real estate services also declined. 

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The not-seasonally adjusted price indexes we track either were unchanged or advanced 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.