September 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 0.2% in September (0.2% expected) after rising 0.4% in August. The index for used cars and trucks continued to rise sharply (+6.7% MoM) and accounted for most of the monthly increase in the seasonally adjusted all-items index. The food index was unchanged, with an increase (+0.6%) in the food away from home index offsetting a decline (-0.4%) in the food at home index. The energy index rose 0.8% in September as the index for natural gas increased 4.2%.

The index for all items less food and energy rose 0.2% in September after larger increases in July and August. The index for used cars and trucks rose 6.7% in September, its largest monthly increase since February 1969. The indexes for shelter, new vehicles, and recreation also increased in September. The indexes for motor vehicle insurance, airline fares, and apparel were among those to decline over the month.

The all-items index rose 1.4% for the 12 months ending September, a slightly larger increase than the 1.3% rise for the 12-month period ending August. The index for all items less food and energy rose 1.7% over the last 12 months, the same increase as the period ending August. The food index increased 3.9% over the last 12 months, while the energy index declined 7.7%.

 

Producer Price Index

The Producer Price Index for final demand (PPI-FD) advanced 0.4% in September (+0.2% expected). Final demand prices rose 0.3% in August and 0.6% in July. In September, nearly two-thirds of the rise in prices for final demand is attributable to a 0.4% increase in the index for final demand services. Prices for final demand goods also moved up 0.4%.

On an unadjusted basis, the final demand index increased 0.4% for the 12 months ended in September, the first advance since moving up 0.3% for the 12 months ended in March. The index for final demand less foods, energy, and trade services advanced 0.4% in September, the largest increase since rising 0.4% in April 2019. For the 12 months ended in September, prices for final demand less foods, energy, and trade services moved up 0.7%, the largest advance since increasing 1.0% for the 12 months ended in March.

Final Demand

Final demand services: The index for final demand services rose 0.4% in September, the third consecutive advance. Over 80% of the broad-based September increase can be traced to prices for final demand services less trade, transportation, and warehousing, which climbed 0.5%. The indexes for final demand trade services and for final demand transportation and warehousing services also moved higher, rising 0.2% and 0.4%, respectively. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: A 3.9% advance in the index for traveler accommodation services was a major factor in the September rise in prices for final demand services. The indexes for hardware, building materials, and supplies retailing; fuels and lubricants retailing; transportation of passengers (partial); food wholesaling; and hospital inpatient care also moved higher. In contrast, the index for food retailing fell 3.2%. Prices for truck transportation of freight and deposit services (partial) also decreased.

Final demand goods: The index for final demand goods increased 0.4% in September, the fifth consecutive rise. Nearly two-thirds of the September advance is attributable to prices for final demand goods less foods and energy, which climbed 0.4%. The index for final demand foods jumped 1.2%. Conversely, prices for final demand energy declined 0.3%.

Product detail: A 14.7% rise in prices for iron and steel scrap was a major factor in the September advance in the index for final demand goods. Prices for fresh and dry vegetables, residential electric power, corn, beef and veal, and oilseeds also moved higher. In contrast, the gasoline index fell 2.8%. Prices for natural, processed, and imitation cheese and for household refrigeration equipment also decreased.

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The not-seasonally adjusted price indexes we track were all positive MoM but mixed YoY.

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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.