October 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) was unchanged in October (0.2% expected). Component indexes were mixed, with many offsetting increases and decreases. The food index rose 0.2%, with the food away from home index increasing by 0.3% and a smaller 0.1% rise in the food at home index. The energy index rose 0.1% in October as the index for electricity increased 1.2%.

The index for all items less food and energy was unchanged in October following an increase of 0.2% in September. The index for shelter increased 0.1% in October, which was offset by a 0.4% decrease in the index for medical care. The indexes for airline fares, recreation, and new vehicles were among those to rise, while the indexes for motor vehicle insurance, apparel, and household furnishings and operations declined.

The all items index rose 1.2% for the 12 months ending October, a slightly smaller increase than the 1.4% rise for the 12-month period ending September. The index for all items less food and energy rose 1.6% over the last 12 months after rising 1.7% in September. The food index increased 3.9% over the last 12 months, while the energy index declined 9.2%.

 

Producer Price Index

The Producer Price Index for final demand (PPI-FD) advanced 0.3% in October (+0.2% expected). Final demand prices rose 0.4% in September and 0.3% in August. Nearly 60% of October’s MoM rise in the final demand index can be traced to a 0.5% increase in prices for final demand goods. The index for final demand services moved up 0.2%.

The index for final demand less foods, energy, and trade services advanced 0.2% in October, the sixth consecutive increase. For the 12 months ended in October, prices for final demand less foods, energy, and trade services rose 0.8%, the largest advance since moving up 1.0% for the 12 months ended in March.

Final Demand

Final demand goods: The index for final demand goods increased 0.5% in October, the sixth consecutive rise. Nearly three-fourths of the October advance is attributable to prices for final demand foods, which jumped 2.4%. The index for final demand energy moved up 0.8%. Prices for final demand goods less foods and energy were unchanged.

Product detail: In October, a major factor in the increase in prices for final demand goods was the index for fresh and dry vegetables, which rose 26.8%. Prices for gasoline, meats, chicken eggs, and thermoplastic resins and materials also moved higher. In contrast, the residential electric power index fell 1.0%. Prices for light motor trucks, packaged fluid milk and related products, and passenger cars also decreased. (In accordance with usual practice, most new-model-year passenger cars and light motor trucks were introduced into the PPI in October. See Report on Quality Changes for 2021 Model Vehicles at www.bls.gov/web/ppi/ppimotveh.htm.)

Final demand services: The index for final demand services rose 0.2% in October after advancing 0.4% in September. Nearly 40% of the broad-based October increase can be traced to prices for final demand transportation and warehousing services, which moved up 1.1%. The indexes for final demand trade services and final demand services less trade, transportation, and warehousing also advanced, 0.2% and 0.1%, respectively. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: Over a quarter of the advance in the index for final demand services can be traced to prices for long-distance motor carrying, which rose 1.9%. The indexes for hardware, building materials, and supplies retailing; securities brokerage, dealing, and investment advice; automotive fuels and lubricants retailing; hospital inpatient care; and automobile retailing (partial) also moved higher. Conversely, margins for chemicals and allied products wholesaling fell 2.6%. The indexes for gaming receipts (partial) and physician care 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.