July 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 0.3% in July (+0.2% expected). Increases in the indexes for gasoline and shelter were the major factors in the seasonally adjusted all items monthly increase. The energy index rose in July as the gasoline and electricity indexes increased, though the natural gas index declined. The index for food was unchanged for the second month in a row, as a decline in the food at home index was offset by an increase in the food away from home index.

The index for all items less food and energy rose 0.3 in July, the same increase as in June. The July rise was broad-based, with increases in the indexes for shelter, medical care, airline fares, household furnishings and operations, apparel, and personal care all contributing to the increase. The index for new vehicles was one of the few to decline in July.  

The all items index increased 1.8% for the 12 months ending July, a larger increase than the 1.6% rise for the period ending June. The index for all items less food and energy rose 2.2% over the last 12 months, slightly more than the 2.1% increase for the period ending June. The food index rose 1.8% over the last year while the energy index declined 2.0%. 

Producer Price Index

The Producer Price Index for final demand (PPI-FD) advanced 0.2% in July (+0.1% expected). Final demand prices moved up 0.1% in both June and May. The rise in final demand prices was led by a 0.4% increase in the index for final demand goods. Prices for final demand construction rose 0.6%. In contrast, the index for final demand services declined 0.1%. The final demand index rose 1.7% for the 12 months ended in July.

The index for final demand less foods, energy, and trade services fell 0.1% in July, the first decrease since declining 0.1% in October 2015. For the 12 months ended in July, prices for final demand less foods, energy, and trade services moved up 1.7%.

Final Demand

Final demand goods: The index for final demand goods rose 0.4% in July, the largest increase since a 1.0% jump in March. Over 80% of the broad-based advance is attributable to prices for final demand energy, which rose 2.3%. The index for final demand goods less foods and energy inched up 0.1%, and prices for final demand foods increased 0.2%.

Product detail: Over half of the July rise in the index for final demand goods can be traced to prices for gasoline, which advanced 5.2%. The indexes for diesel fuel, electric power, corn, beef and veal, and tobacco products also advanced. Conversely, prices for jet fuel fell 3.5%. The indexes for pork and carbon steel scrap also decreased.

Final demand services: The index for final demand services declined 0.1% in July after rising for five consecutive months. The decrease is attributable to prices for final demand services less trade, transportation, and warehousing, which moved down 0.3%. In contrast, the indexes for final demand trade services and for final demand transportation and warehousing services both advanced 0.2%.

Product detail: A major factor in the decline in prices for final demand services was the index for guestroom rental, which moved down 4.3%. The indexes for fuels and lubricants retailing, loan services (partial), machinery and equipment parts and supplies wholesaling, and truck transportation of freight also decreased. Conversely, margins for machinery and vehicle wholesaling advanced 3.0%. The indexes for hospital outpatient care; health, beauty, and optical goods retailing; and transportation of passengers (partial) also rose. 

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