June 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 June (+0.0% expected), the same increase as in May. Increases in the indexes for shelter, apparel, and used cars and trucks more than offset declines in energy indexes to result in the seasonally adjusted all-items monthly increase in June. The energy index fell 2.3% as all of the major energy component indexes declined. The food index was unchanged as the index for food away from home rose but the index for food at home declined.

The index for all items less food and energy rose 0.3 in June, its largest monthly increase since January 2018. Along with the indexes for shelter, used cars and trucks, and apparel, the indexes for household furnishings and operations, medical care, and motor vehicle insurance were among the indexes that increased in June. The indexes for recreation, airline fares, and personal care all declined in June.

The all-items index increased 1.6% for the 12 months ending June, a smaller increase than the 1.8% rise for the period ending May. The index for all items less food and energy rose 2.1% over the last 12 months, and the food index increased 1.9%. The energy index, in contrast, declined 3.4% over the last 12 months.   

Producer Price Index

The Producer Price Index for final demand (PPI-FD) advanced 0.1% in June (+0.1% expected). Final demand prices moved up 0.1% in May and 0.2% in April. The rise is attributable to a 0.4% increase in the index for final demand services. Conversely, prices for final demand goods fell 0.4%. The index for final demand less foods, energy, and trade services was unchanged in June following advances of 0.4% in both April and May.

The final demand index rose 1.7% for the 12 months ended in June, the lowest rate of increase since advancing 1.7% in January 2017. Prices for final demand less foods, energy, and trade services climbed 2.1% YoY.

Final Demand

Final demand services: The index for final demand services rose 0.4% in June, the largest increase since climbing 0.8% in October 2018. Most of the June advance is attributable to margins for final demand trade services, which moved up 1.3%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services rose 0.3%, while the index for final demand services less trade, transportation, and warehousing was unchanged.

Product detail: Over a quarter of the June increase in prices for final demand services can be traced to margins for fuels and lubricants retailing, which jumped 12.2%. The indexes for health, beauty, and optical goods retailing; apparel, footwear, and accessories retailing; machinery, equipment, parts, and supplies wholesaling; loan services (partial); and truck transportation of freight also moved higher. In contrast, prices for traveler accommodation services fell 4.0%. The indexes for jewelry retailing and airline passenger services also declined.

Final demand goods: Prices for final demand goods moved down 0.4% in June, the largest decrease since falling 0.6% in January. The June decline is attributable to a 3.1% drop in the index for final demand energy. Conversely, prices for final demand foods climbed 0.6%. The index for final demand goods less foods and energy was unchanged.

Product detail: Nearly 60% of the June decrease in the index for final demand goods can be traced to a 5.0% decline in prices for gasoline. The indexes for diesel fuel, meats, liquefied petroleum gas, iron and steel scrap, and residual fuels also moved lower. In contrast, corn prices rose 19.9%. The indexes for ethanol and residential electric power also increased. 

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The not-seasonally adjusted price indexes we track were all down 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.