April 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 0.8 percent in April (-0.8% expected), the largest monthly decline since December 2008. A 20.6-percent decline in the gasoline index was the largest contributor to the monthly decrease in the seasonally adjusted all items index, but the indexes for apparel, motor vehicle insurance, airline fares, and lodging away from home all fell sharply as well. In contrast, food indexes rose in April, with the index for food at home posting its largest monthly increase since February 1974. The energy index declined mostly due to the decrease in the gasoline index, though some energy component indexes rose. 

The index for all items less food and energy fell 0.4 percent in April, the largest monthly decline in the history of the series, which dates to 1957. Along with the indexes mentioned above, the indexes for used cars and trucks and recreation also declined. The indexes for rent, owners’ equivalent rent, medical care, and household furnishings and operations all increased in April.

The all items index increased 0.3 percent for the 12 months ending April, the smallest 12-month increase since October 2015. The index for all items less food and energy increased 1.4 percent over the last 12 months, its smallest increase since April 2011. The energy index fell 17.7 percent over the last year. In contrast, the food index rose 3.5 percent over the last 12 months, its largest 12-month increase since February 2012.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) declined 1.3 percent in April (-0.5% expected). This decrease is the largest since the index began in December 2009. Final demand prices fell 0.2 percent in March and 0.6 percent in February. Over 80 percent of the decrease in the final demand index can be traced to a 3.3-percent drop in prices for final demand goods. The index for final demand services moved down 0.2 percent.

The final demand index moved down 1.2 percent for the 12 months ended in April, the largest decline since falling 1.3 percent for the 12 months ended November 2015. Prices for final demand less foods, energy, and trade services fell 0.9 percent in April, the largest decline since the index was introduced in September 2013. For the 12 months ended in April, the index for final demand less foods, energy, and trade services moved down 0.3 percent, the first 12-month decrease.

Final Demand

Final demand goods: The index for final demand goods fell 3.3 percent in April, the largest decline since the series began in December 2009. Most of the broad-based decrease is attributable to prices for final demand energy, which fell 19.0 percent. The indexes for final demand goods less foods and energy and for final demand foods moved down 0.4 percent and 0.5 percent, respectively.

Product detail: Two-thirds of the April decrease in the index for final demand goods can be traced to prices for gasoline, which dropped 56.6 percent. This is the largest decrease since the series began in February 1947. The indexes for jet fuel, diesel fuel, basic organic chemicals, home heating oil, and corn also moved lower. In contrast, prices for beef and veal rose 12.6 percent. The indexes for distilled and bottled liquor (excluding brandy) and for electric power also increased.

Final demand services: The index for final demand services fell 0.2 percent in April following a 0.2-percent advance in March. Leading the decrease, prices for final demand services less trade, transportation, and warehousing moved down 0.9 percent. The index for final demand transportation and warehousing services declined 3.5 percent. Conversely, margins for final demand trade services increased 1.6 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: Leading the April decline in the index for final demand services, prices for portfolio management fell 12.0 percent. The indexes for airline passenger services; traveler accommodation services; services related to securities brokerage and dealing (partial); hospital outpatient care; and apparel, footwear, and accessories retailing also moved lower. In contrast, margins for automotive fuels and lubricants retailing rose 41.6 percent. The indexes for inpatient care and for chemicals and allied products wholesaling also advanced. 

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The not-seasonally adjusted price indexes we track were mixed on a MoM basis, but declined on a YoY basis. 

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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.