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Macro Pulse highlights recent activity and events expected to affect the U.S. economy over the next 24 months. While the review is of the entire U.S. economy its particular focus is on developments affecting the Forest Products industry. Everyone with a stake in any level of the sector can benefit from
Macro Pulse's timely yet in-depth coverage.


Tuesday, July 14, 2020

June 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) increased 0.6% in June (0.5% expected) after falling 0.1% in May. The gasoline index rose sharply in June after recent declines and accounted for over half of the monthly increase in the seasonally adjusted all-items index. The energy index increased 5.1% in June as the gasoline index rose 12.3%.  The food index also rose in June, increasing 0.6% as the index for food at home continued to rise.

The index for all items less food and energy rose 0.2% in June, its first monthly increase since February. The index for motor vehicle insurance increased sharply in June after recent declines. The indexes for apparel, shelter, and medical care also increased in June, while the indexes for used cars and trucks, recreation, and communication all declined.

The all items index increased 0.6% for the 12 months ending June; this compares to a 0.1% increase for the 12 months ending May. The index for all items less food and energy increased 1.2% over the last 12 months. The food index increased 4.5% over the last 12 months, with the index for food at home rising 5.6%. Despite increasing in June, the energy index fell 12.6% over the last 12 months.

 

Producer Price Index

The Producer Price Index for final demand (PPI-FD) fell 0.2% in June (+0.4% expected). This decrease followed a 0.4% increase in May and a 1.3% decline in April. In June, the decrease in the final demand index is attributable to a 0.3% decline in prices for final demand services. In contrast, the index for final demand goods rose 0.2%.

On an unadjusted basis, the final demand index moved down 0.8% for the 12 months ended in June. Prices for final demand less foods, energy, and trade services advanced 0.3% in June, the largest increase since a 0.3% rise in January. For the 12 months ended in June, prices for final demand less foods, energy, and trade services edged down 0.1%.

Final Demand

Final demand services: The index for final demand services moved down 0.3% in June, the largest decrease since falling 0.3% in February. The June decline can be attributed to margins for final demand trade services, which dropped 1.8%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Conversely, the indexes for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services increased 0.3% and 0.9%, respectively.

Product detail: Eighty percent of the June decline in the index for final demand services can be traced to a 7.3% drop in margins for machinery and vehicle wholesaling. The indexes for apparel, jewelry, footwear, and accessories retailing; fuels and lubricants retailing; dental care; deposit services (partial); and long-distance motor carrying also fell. In contrast, prices for hospital inpatient care rose 0.8%. The indexes for transportation of passengers (partial) and automobile retailing (partial) also increased.

Final demand goods: The index for final demand goods rose 0.2% in June after increasing 1.6% in May. Leading the June advance, prices for final demand energy jumped 7.7%. The index for final demand goods less foods and energy inched up 0.1%. Conversely, prices for final demand foods dropped 5.2%.

Product detail: In June, a major factor in the increase in prices for final demand goods was the gasoline index, which rose 26.3%. Prices for diesel fuel; jet fuel; natural, processed, and imitation cheese; basic organic chemicals; and fresh and dry vegetables also advanced. In contrast, prices for meats dropped 27.7%. The indexes for residential electric power and light motor trucks 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.


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