March 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) declined 0.4% in March (-0.3% expected). A sharp decline in the gasoline index was a major cause of the monthly decrease in the seasonally adjusted all items index, with decreases in the indexes for airline fares, lodging away from home, and apparel also contributing. The energy index fell 5.8% as the gasoline index decreased 10.5%. The food index rose in March, increasing 0.3% as the food at home index rose 0.5%.

The index for all items less food and energy fell 0.1% in March, its first monthly decline since January 2010. Along with the indexes for airline fares, lodging away from home, and apparel, the index for new vehicles declined in March. The index for shelter was unchanged, with increases in the indexes for rent and for owners’ equivalent rent offsetting the aforementioned decline in the index for lodging away from home. Indexes that increased in March include medical care, used cars and trucks, motor vehicle insurance, and education. 

The all items index increased 1.5% for the 12 months ending March, a notably smaller increase than the 2.3% increase for the period ending February. The index for all items less food and energy rose 2.1% over the last 12 months. The food index rose 1.9% over the last 12 months, while the energy index declined 5.7%.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) fell 0.2% in March (-0.3% expected). Final demand prices declined 0.6% in February and increased 0.5% in January. On an unadjusted basis, the final demand index advanced 0.7% for the 12 months ended in March.

In March, the decrease in the final demand index can be traced to a 1.0% drop in prices for final demand goods. The index for final demand services moved up 0.2%.

Prices for final demand less foods, energy, and trade services declined 0.2% in March, the largest decrease since falling 0.2% in October 2015. For the 12 months ended in March, the index for final demand less foods, energy, and trade services rose 1.0%.

Final Demand

Final demand goods: The index for final demand goods fell 1.0% in March, the largest decline since moving down 1.1% in September 2015. The March decrease can be attributed to prices for final demand energy, which dropped 6.7%. In contrast, the index for final demand goods less foods and energy advanced 0.2%. Prices for final demand foods were unchanged.

Product detail: Eighty percent of the March decrease in the index for final demand goods can be traced to prices for gasoline, which dropped 16.8%. The indexes for diesel fuel, meats, jet fuel, liquefied petroleum gas, and industrial chemicals also moved lower. Conversely, prices for motor vehicles rose 0.8%. The indexes for chicken eggs and frozen specialty foods also increased.

Final demand services: The index for final demand services rose 0.2% in March after declining 0.3% in February. In March, the increase can be traced to margins for final demand trade services, which moved up 1.4%. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, the index for final demand transportation and warehousing services decreased 3.3%. Prices for final demand services less trade, transportation, and warehousing were unchanged.

Product detail: Leading the March increase in the index for final demand services, margins for apparel, jewelry, footwear, and accessories retailing jumped 8.1%. The indexes for fuels and lubricants retailing; securities brokerage, dealing, and investment advice; loan services (partial); food retailing; and inpatient care also moved higher. Conversely, prices for airline passenger services decreased 10.0%. The indexes for deposit services (partial) and health, beauty, and optical goods retailing 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.