October 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) rose 0.4% in October (+0.3% expected). The energy index (especially gasoline: +3.7%) increased 2.7% in October after recent monthly declines and accounted for more than half of the increase in the seasonally adjusted all items index; increases in the indexes for medical care (+0.9%), for recreation (+0.4%), and for food (+0.2%) also contributed.

The index for all items less food and energy rose 0.2% in October after increasing 0.1% in September. Along with the indexes for medical care and for recreation, the indexes for used cars and trucks, for shelter, and for personal care all rose in October, though the increase in the shelter index was the smallest since October 2013. The apparel index fell in October, as did the indexes for household furnishings and operations, for new vehicles, and for airline fares.

The all items index increased 1.8% for the 12 months ending October, a slightly larger rise than the 1.7% increase for the period ending September. The index for all items less food and energy rose 2.3% over the last 12 months. The food index rose 2.1% over the last 12 months, while the energy index declined 4.2% over the last year despite increasing in October.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) increased 0.4% in October (+0.3% expected). Final demand prices fell 0.3% in September and edged up 0.1% in August. In October, the index for final demand services rose 0.3%, and prices for final demand goods increased 0.7%.

The final demand index advanced 1.1% for the 12 months ended in October, the smallest annual rise since a 1.1% increase in the 12 months ended October 2016. The index for final demand less foods, energy, and trade services inched up 0.1% after no change in September. For the 12 months ended in October, prices for final demand less foods, energy, and trade services advanced 1.5%.

Final Demand

Final demand services: The index for final demand services moved up 0.3% in October following a 0.2% decline in September. Over 70% of the broad-based increase can be traced to a 0.8% advance in margins for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing edged up 0.1%, and the index for final demand transportation and warehousing services increased 0.3%.

Product detail: A major factor in the advance in the index for final demand services were margins for apparel, jewelry, footwear, and accessories retailing, which rose 2.6%. The indexes for outpatient care (partial), inpatient care, food wholesaling, food and alcohol retailing, and truck transportation of freight also moved higher. In contrast, prices for securities brokerage, dealing, investment advice, and related services dropped 8.4%. The indexes for machinery and vehicle wholesaling and for loan services (partial) also moved lower. (See table 4.)

Final demand goods: The index for final demand goods advanced 0.7% in October, the largest increase since a 1.0% jump in March. Seventy percent of the October rise is attributable to prices for final demand energy, which moved up 2.8%. The index for final demand foods advanced 1.3%, while prices for final demand goods less foods and energy were unchanged.

Product detail: Almost half of the October advance in the index for final demand goods can be traced to prices for gasoline, which moved up 7.3%. The indexes for fresh and dry vegetables, residential electric power, basic organic chemicals, corn, and diesel fuel also increased. Conversely, prices for iron and steel scrap fell 15.7%. The indexes for chicken eggs and passenger cars also declined. (In accordance with usual practice, most new-model-year passenger cars and light motor trucks were introduced into the PPI in October. 

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The not-seasonally adjusted price indexes we track 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.