May 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 0.1% in May (+0.1% expected) after rising 0.3% in April. The food index rose 0.3% in May after declining in April, with the food index accounting for nearly half of the May seasonally adjusted all items monthly increase. The energy index fell 0.6% in May, with the gasoline index falling 0.5% and the indexes for electricity and natural gas also declining in May.

The index for all items less food and energy increased 0.1% for the fourth consecutive month. The indexes for shelter, medical care, airline fares, education, household furnishings and operations, and new vehicles all rose in May. The indexes for used cars and trucks, recreation, and motor vehicle insurance were among those that declined over the month.   

Over the last 12 months, the all items index increased 1.8% before seasonal adjustment. The all items index increased 1.8% for the 12 months ending May. The index for all items less food and energy rose 2.0% over the last 12 months, and the food index also rose 2.0%. The energy index decreased 0.5% over the past year.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) rose 0.1% in May (+0.1% expected). Final demand prices advanced 0.2% in April and 0.6% in March. The rise in final demand prices is attributable to a 0.3% increase in the index for final demand services. In contrast, prices for final demand goods declined 0.2%.

On an unadjusted basis, the final demand index increased 1.8% for the 12 months ended in May. The index for final demand less foods, energy, and trade services moved up 0.4% in May, the same as in April. For the 12 months ended in May, prices for final demand less foods, energy, and trade services advanced 2.3%.

Final Demand

Final demand services: Prices for final demand services moved up 0.3% in May, the fourth consecutive increase. Most of the May advance can be traced to the index for final demand services less trade, transportation, and warehousing, which rose 0.5%. Prices for final demand transportation and warehousing services climbed 0.7%. Conversely, margins for final demand trade services fell 0.5%. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: Nearly 80% of the May advance in the index for final demand services is attributable to prices for guestroom rental, which jumped 10.1%. The indexes for fuels and lubricants retailing, outpatient care (partial), inpatient care, portfolio management, and transportation of passengers (partial) also moved higher. In contrast, margins for apparel, footwear, and accessories retailing declined 5.2%. The indexes for machinery, equipment, parts, and supplies wholesaling and for loan services (partial) also decreased.

Final demand goods: The index for final demand goods moved down 0.2% in May following three consecutive increases. About three-quarters of the decrease can be traced to prices for final demand energy, which fell 1.0%. The index for final demand foods declined 0.3%, while prices for final demand goods less foods and energy were unchanged.

Product detail: Nearly 40% of the May decrease in the index for final demand goods is attributable to prices for gasoline, which fell 1.7%. The indexes for diesel fuel, iron and steel scrap, chicken eggs, beef and veal, and fresh fruits and melons also moved lower. Conversely, prices for prepared poultry products increased 7.0%. The indexes for light motor trucks and jet fuel also advanced. 

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