May 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 0.1% in May (0.0% expected) after falling 0.8% in April. Declines in the indexes for motor vehicle insurance, energy, and apparel more than offset increases in food and shelter indexes to result in the monthly decrease in the seasonally adjusted all-items index. The gasoline index declined 3.5% in May, leading to a 1.8% decline in the energy index. The food index, in contrast, increased 0.7% in May as the index for food at home rose 1.0%.

The index for all items less food and energy fell 0.1% in May, its third consecutive monthly decline. This is the first time this index has ever declined in three consecutive months. Along with motor vehicle insurance and apparel, the indexes for airline fares and used cars and trucks declined in May. The indexes for shelter, recreation, medical care, household furnishings and operations, and new vehicles all increased.

The all-items index increased 0.1% for the 12 months ending May. The index for all items less food and energy increased 1.2% over the last 12 months; this compares to a 2.4% increase a few months ago (the period ending February). The energy index fell 18.9% over the last year. The food index increased 4.0% over the last 12 months, with the index for food at home rising 4.8%.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) rose 0.4% in May (+0.1% expected). This increase followed declines of 1.3% in April and 0.2% in March. The advance in the final demand index is attributable to prices for final demand goods, which climbed 1.6%. In contrast, the index for final demand services fell 0.2%. On an unadjusted basis, the final demand index decreased 0.8% for the 12 months ended in May.

Prices for final demand less foods, energy, and trade services edged up 0.1% in May, following three consecutive declines. For the 12 months ended in May, the index for final demand less foods, energy, and trade services moved down 0.4%, the largest 12-month decrease since the index began in August 2013.

Final Demand

Final demand goods: The index for final demand goods rose 1.6% in May, the largest increase since the index began in November 2009. Nearly two-thirds of the advance can be traced to prices for final demand foods, which increased 6.0%. The index for final demand energy climbed 4.5%, while prices for goods less foods and energy were unchanged.

Product detail: Two-thirds of the May increase in the index for final demand goods is attributable to a 40.4% jump in meat prices. The indexes for gasoline, processed young chickens, light motor trucks, liquefied petroleum gas, and carbon steel scrap also moved higher. Conversely, prices for chicken eggs fell 41.2%. The indexes for diesel fuel and for plastic resins and materials also decreased.

Final demand services: The index for final demand services fell 0.2% in May, the same as in April. The May decrease can be attributed to margins for final demand trade services, which declined 0.8%. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, prices for final demand transportation and warehousing services advanced 1.5%. The index for final demand services less trade, transportation, and warehousing was unchanged.

Product detail: Leading the May decline in the index for final demand services, margins for fuels and lubricants retailing dropped 13.1%. The indexes for loan services (partial); securities brokerage, dealing, investment advice, and related services; truck transportation of freight; machinery and vehicle wholesaling; and automobile and automobile parts retailing also moved lower. Conversely, prices for transportation of passengers (partial) rose 12.2%. The indexes for dental care and apparel, jewelry, footwear, and accessories retailing also increased. 

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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.