March 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 0.4% in March (+0.2% expected). The energy index increased 3.5% in March, accounting for about 60% of the seasonally adjusted all-items monthly increase. The gasoline index increased sharply (+6.5%), and the electricity index also rose (+0.4%), although the natural gas index declined (-0.1%). The food index also increased in March (+0.3%), with the indexes for food at home and food away from home both continuing to rise.

The index for all items less food and energy increased 0.1% in March, the same increase as in February. The indexes for shelter, medical care, new vehicles, recreation, education, and tobacco were among those that increased in March, while the indexes for apparel, used cars and trucks, and airline fares all declined. 

The all-items index increased 1.9% for the 12 months ending March, a larger increase than the 1.5% rise for the period ending February. The index for all items less food and energy rose 2.0% over the last 12 months. The food index rose 2.1% over the past year, its largest 12-month increase since the period ending March 2015, while the energy index declined 0.4% over the past year.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) rose 0.6% in March (+0.4% expected). Final demand prices edged up 0.1% in February and decreased 0.1% in January. Over 60% of the increase in the index for final demand can be traced to a 1.0% advance in prices for final demand goods. The index for final demand services moved up 0.3%.

On an unadjusted basis, the final demand index increased 2.2% for the 12 months ended in March, the largest 12-month rise since a 2.5% advance in December 2018. The index for final demand less foods, energy, and trade services was unchanged in March following a 0.1% advance in February. For the 12 months ended in March, prices for final demand less foods, energy, and trade services rose 2.0%.

Final Demand

Final demand goods: The index for final demand goods moved up 1.0% in March, the largest advance since a 1.0% rise in May 2015. In March, over 80% of the broad-based increase can be traced to prices for final demand energy, which jumped 5.6%. The index for final demand goods less foods and energy rose 0.2%. Prices for final demand foods advanced 0.3%.

Product detail: Over 60% of the increase in the index for final demand goods is attributable to a 16.0% jump in gasoline prices. The indexes for diesel fuel, fresh and dry vegetables, cigarettes, beverages and beverage materials, and residential electric power also moved higher. In contrast, prices for pork declined 8.7%. The indexes for light motor trucks and liquefied petroleum gas also decreased.

Final demand services: Prices for final demand services rose 0.3% in March after no change in February. The increase is attributable to the index for final demand trade services, which advanced 1.1%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Conversely, prices for final demand transportation and warehousing services declined 0.8%. The index for final demand less trade, transportation, and warehousing was unchanged.

Product detail: Nearly a third of the increase in the index for final demand services can be traced to margins for apparel, jewelry, footwear, and accessories retailing, which rose 4.2%. The indexes for machinery, equipment, parts, and supplies wholesaling; deposit services (partial); food and alcohol retailing; health, beauty, and optical goods retailing; and portfolio management also advanced. In contrast, prices for long-distance motor carrying fell 1.2%. The indexes for fuels and lubricants retailing and for residential real estate loans (partial) also declined. 

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

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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.