August 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 0.4% in August (0.3% expected). The monthly increase in the seasonally adjusted all-items index was broad-based; a sharp rise in the used cars and trucks index was the largest factor, but the indexes for gasoline, shelter, recreation, and household furnishings and operations also contributed. The energy index rose 0.9% in August as the gasoline index rose 2.0%. The food index rose 0.1% in August after falling in July; an increase in the food away from home index more than offset a slight decline in the food at home index. 

The index for all items less food and energy rose 0.4% in August after increasing 0.6% in July. The sharp rise in the index for used cars and trucks accounted for over 40% of the increase; the indexes for shelter, recreation, household furnishings and operations, apparel, motor vehicle insurance, and airline fares also rose. The indexes for education and personal care were among the few to decline.

The all-items index increased 1.3% for the 12 months ending August; this figure has been rising since the period ending May 2020, when the 12-month increase was 0.1%. The index for all items less food and energy increased 1.7% over the last 12 months. The food index increased 4.1% over the last 12 months, with the index for food at home rising 4.6%. Despite recent monthly increases, the energy index fell 9.0% over the last 12 months.

 

Producer Price Index

The Producer Price Index for final demand (PPI-FD) increased 0.3% in August (+0.3% expected). Final demand prices rose 0.6% in July and fell 0.2% in June. The August rise was led by a 0.5% increase in the index for final demand services. Prices for final demand goods also advanced, inching up 0.1%. The index for final demand less foods, energy, and trade services moved up 0.3% in August, the same as in both July and June.

On a year-over-year comparison, the final demand index declined 0.2% for the 12 months ended in August. Final demand less foods, energy, and trade services increased 0.3%.

Final Demand

Final demand services: The index for final demand services rose 0.5% in August, the same as in July. In August, two-thirds of the advance can be traced to a 1.2% increase in margins for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) The indexes for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services also moved up, 0.3% and 0.2%, respectively.

Product detail: Nearly 20% of the August advance in prices for final demand services is attributable to a 1.1% increase in margins for machinery, equipment, parts, and supplies wholesaling. The indexes for automobiles and automobile parts retailing; truck transportation of freight; food retailing; portfolio management; and securities brokerage, dealing, investment advice, and related services also rose. In contrast, margins for chemicals and allied products wholesaling declined 4.5%. The indexes for airline passenger services and investment banking also fell.

Final demand goods: Prices for final demand goods edged up 0.1% in August, the fourth consecutive increase. The August rise can be attributed to a 0.3% advance in the index for final demand goods less foods and energy. Conversely, prices for final demand foods fell 0.4%, and the index for final demand energy declined 0.1%.

Product detail: Among prices for final demand goods in August, the index for plastic resins and materials rose 4.0%. Prices for diesel fuel, gas fuels, packaged fluid milk and related products, and nonferrous scrap also moved higher. In contrast, the index for chicken eggs dropped 12.2%. Prices for home heating oil, gasoline, and ethanol also decreased.

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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.