January 2020 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 0.1% in January (+0.2% expected) after rising 0.2% in December. The index for shelter accounted for the largest part of the increase in the seasonally adjusted all items index, with the indexes for food and for medical care services also rising. These increases more than offset a decrease in the gasoline index, which fell 1.6% in January. The energy index declined 0.7%, and the major energy component indexes were mixed. The index for food rose 0.2% in January 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 0.2% in January after increasing 0.1% in December. Along with the indexes for shelter and medical care, the indexes for apparel, recreation, education, and airline fares all increased in January. The indexes for used cars and trucks, prescription drugs, motor vehicle insurance, and household furnishings and operations were among those to decline.

The all items index increased 2.5% for the 12 months ending January, the largest 12-month increase since the period ending October 2018. The index for all items less food and energy rose 2.3% over the last 12 months, the same 12-month increase as reported in the previous 3 months. The food index rose 1.8% over the last 12 months, while the energy index increased 6.2% over that period.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) advanced 0.5% in January (+0.2% expected). Final demand prices rose 0.2% in December and declined 0.1% in November. In January, 90% of the increase in the final demand index is attributable to prices for final demand services, which climbed 0.7%. The index for final demand goods inched up 0.1%.

On an unadjusted basis, the final demand index increased 2.1% for the 12 months ended in January, the largest advance since moving up 2.1% for the 12 months ended May 2019. Prices for final demand less foods, energy, and trade services advanced 0.4% in January, the largest increase since a 0.4% rise in April 2019. For the 12 months ended in January, the index for final demand less foods, energy, and trade services moved up 1.5%.

Final Demand

Final demand services: The index for final demand services climbed 0.7% in January, the largest increase since rising 0.7% in October 2018. In January, margins for final demand trade services advanced 1.2%, and prices for final demand services less trade, transportation, and warehousing moved up 0.6%. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, the index for final demand transportation and warehousing services fell 1.6%.

Product detail: Forty percent of the January increase in the index for final demand services can be traced to margins for apparel, jewelry, footwear, and accessories retailing, which jumped 10.3%. The indexes for machinery and vehicle wholesaling; health, beauty, and optical goods retailing; inpatient care; guestroom rental; and portfolio management also moved higher. Conversely, prices for airline passenger services decreased 5.8%. The indexes for professional and commercial equipment wholesaling and for wireless telecommunication services also declined.

Final demand goods: Prices for final demand goods inched up 0.1% in January, the fourth consecutive rise. Leading the January increase, the index for final demand goods less foods and energy climbed 0.3%. Prices for final demand foods advanced 0.2%. In contrast, the index for final demand energy fell 0.7%.

Product detail: A 13.9% rise for prices of iron and steel scrap was a major factor in the January advance in the index for final demand goods. Prices for fresh and dry vegetables; jet fuel; search, detection, navigation, and guidance systems and equipment; and grains also moved higher. Conversely, the gasoline index decreased 1.5%. Prices for chicken eggs, diesel fuel, and motor vehicles also declined. 

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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.