December 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 0.2% in December (+0.3% expected) after rising 0.3% in November. The indexes for gasoline, shelter, and medical care all rose in December, accounting for most of the increase in the seasonally adjusted all items index. The gasoline index increased 2.8% in December. Other major energy component indexes were mixed, and the energy index rose 1.4%. The food index rose 0.2% in December with the indexes for both food at home and food away from home increasing over the month.

The index for all items less food and energy rose 0.1% in December after increasing 0.2% in November. Along with the indexes for shelter and medical care, the indexes for apparel, motor vehicle insurance, recreation, and new vehicles all increased in December. The indexes for used cars and trucks, household furnishings and operations, and airline fares were among those to decline.   

The all items index increased 2.3% for the 12 months ending December, the largest 12-month increase since the period ending October 2018. The index for all items less food and energy also rose 2.3% over the last 12 months, the same increase as the periods ending October and November. The food index rose 1.8% over the last 12 months, while the energy index increased 3.4%.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) edged up 0.1% (+0.2% expected) in December. Final demand prices were unchanged in November and rose 0.4% in October. The increase in the final demand index was the result of a 0.3% rise in prices for final demand goods. The index for final demand services was unchanged.

On an unadjusted basis, the final demand index moved up 1.3% in 2019, after a 2.6% advance in 2018. Prices for final demand less foods, energy, and trade services inched up 0.1% in December following no change in November. In 2019, the index for final demand less foods, energy, and trade services climbed 1.5% after advancing 2.8% in 2018.

Final Demand

Final demand goods: The index for final demand goods rose 0.3% in December, the same as in November. Most of the increase in December can be traced to a 1.5% advance in prices for final demand energy. The index for final demand goods less foods and energy edged up 0.1%. In contrast, prices for final demand foods moved down 0.2%.

Product detail: Over 60% of the December increase in the index for final demand goods can be attributed to a 3.7% advance in gasoline prices. The indexes for diesel fuel, fresh fruits and melons, carbon steel scrap, residential electric power, and pork also moved higher. Conversely, prices for beef and veal fell 7.0%. The indexes for jet fuel and for plastic resins and materials also declined.

Final demand services: Prices for final demand services were unchanged in December following a 0.3% decrease in November. In December, a 2.7% advance in the index for final demand transportation and warehousing services offset a 0.3% decline in margins for final demand trade services and a 0.1% decrease in the index for final demand services less trade, transportation, and warehousing. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: In December, prices for transportation of passengers (partial) jumped 8.5%. The indexes for machinery and vehicle wholesaling; machinery and equipment parts and supplies wholesaling; health, beauty, and optical goods retailing; and portfolio management also increased. In contrast, margins for apparel, jewelry, footwear, and accessories retailing declined 3.7%. The indexes for chemicals and allied products wholesaling, guestroom rental, fuels and lubricants retailing, and professional and commercial equipment wholesaling also moved lower. 

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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.