February 2020 Consumer and Producer Price Indices (incl. Forest Products)

Click image for larger version

Consumer Price Index

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1% in February (+0.1% expected). Increases in the indexes for shelter and for food were the main causes of the increase in the seasonally adjusted all items index, more than offsetting a decline in the energy index. The food index increased 0.4% over the month, with the food at home index rising 0.5%, its largest monthly increase since May 2014. The index for energy fell 2.0% in February, with all of its major component indexes declining.  

The index for all items less food and energy rose 0.2% in February, the same increase as in January. Along with the index for shelter, the indexes for apparel, personal care, used cars and trucks, education, and medical care were among those that increased in February. The indexes for recreation and airline fares declined over the month.  

The all items index increased 2.3% for the 12 months ending February, a smaller increase than the 2.5% figure for the period ending January. The index for all items less food and energy rose 2.4% over the last 12 months. The food index rose 1.8% over the last 12 months, while the energy index increased 2.8% over that period.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) fell 0.6% in February (+0.2% expected). Final demand prices advanced 0.5% in January and 0.2% in December. In February, 60% of the decline in the final demand index can be traced to a 0.9% decrease in prices for final demand goods. The index for final demand services moved down 0.3%.

On an unadjusted basis, the final demand index increased 1.3% for the 12 months ended in February. Prices for final demand less foods, energy, and trade services inched down 0.1% in February, the first decline since falling 0.1% in June 2019. For the 12 months ended in February, the index for final demand less foods, energy, and trade services rose 1.4%.

Final Demand

Final demand goods: The index for final demand goods fell 0.9% in February, the largest decline since moving down 1.1% in September 2015. Over 60% of the broad-based February decrease can be traced to prices for final demand energy, which dropped 3.6%. The indexes for final demand foods and for final demand goods less foods and energy declined 1.6% and 0.1%, respectively.

Product detail: Nearly one-third of the February decrease in the index for final demand goods is attributable to gasoline prices, which dropped 6.5%. The indexes for fresh and dry vegetables, diesel fuel, jet fuel, meats, and light motor trucks also moved lower. In contrast, prices for chicken eggs rose 27.8%. The indexes for pharmaceutical preparations and electric power also increased. (See table 4.)

Final demand services: The index for final demand services fell 0.3% in February, the largest decline since moving down 0.3% in September 2019. In February, over 70% of the broad-based decrease can be traced to margins for final demand trade services, which dropped 0.7%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services declined 0.1% and 0.6%, respectively.

Product detail: Leading the February decrease in prices for final demand services, margins for apparel, jewelry, footwear, and accessories retailing dropped 11.7%. The indexes for guestroom rental; loan services (partial); food and alcohol wholesaling; health, beauty, and optical goods retailing; and airline passenger services also moved lower. Conversely, margins for machinery, equipment, parts, and supplies wholesaling increased 1.3%. The indexes for outpatient care (partial) and wireless telecommunication services also advanced. 

Click image for larger version

The not-seasonally adjusted price indexes we track were mixed on both MoM and YoY bases. 

Click image for larger version

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.