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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
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Friday, January 15, 2021

December 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 December (+0.4% expected). The increase in the all-items index was driven by an 8.4% increase in the gasoline index, which accounted for more than 60% of the overall increase. The other components of the energy index were mixed, resulting in an increase of 4.0% for the month. The food index rose in December, as both the food at home and the food away from home indexes increased 0.4%. 

The index for all items less food and energy increased 0.1% in December after rising 0.2% in the previous month. The indexes for apparel, motor vehicle insurance, new vehicles, personal care, and household furnishings and operations all rose in December. The indexes for used cars and trucks, recreation, and medical care were among those to decline over the month.

The all-items index rose 1.4% for the 12 months ending December, a slightly larger increase than the 1.2% rise reported for the period ending November. The index for all items less food and energy rose 1.6% over the last 12 months, as it did in the periods ending October and November. The food index rose 3.9% over the last 12 months, while the energy index fell 7.0%.

 

Producer Price Index

The producer price index for final demand (PPI-FD) increased 0.3% in December (+0.3% expected). This rise followed advances of 0.1% in November and 0.3% in October. On an unadjusted basis, the final demand index moved up 0.8% in 2020, after increasing 1.4% in 2019.

The MoM advance in the final demand index can be traced to a 1.1% increase in prices for final demand goods. Conversely, the index for final demand services edged down 0.1%.

Prices for final demand less foods, energy, and trade services rose 0.4% in December, the eighth consecutive advance. In 2020, the index for final demand less foods, energy, and trade services moved up 1.1%, following a 1.5% increase in 2019.

Final Demand

Final demand goods: The index for final demand goods advanced 1.1% in December, the largest increase since moving up 1.5% in May. Over 70% of the December rise can be traced to prices for final demand energy, which climbed 5.5%. The index for final demand goods less foods and energy advanced 0.5%. In contrast, prices for final demand foods inched down 0.1%.

Product detail: Nearly half of the December increase in the index for final demand goods is attributable to gasoline prices, which jumped 16.1%. The indexes for iron and steel, diesel fuel, jet fuel, meats, and home heating oil also moved higher. Conversely, prices for natural cheese (except cottage cheese) fell 10.8%. The indexes for electric power and for electronic computers and computer equipment also declined.

Final demand services: The index for final demand services inched down 0.1% in December, the first decrease since falling 0.4% in April. Leading the December decline, margins for final demand trade services decreased 0.8%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services edged down 0.1%. In contrast, the index for final demand services less trade, transportation, and warehousing rose 0.2%.

Product detail: Leading the December decrease in the index for final demand services, margins for fuels and lubricants retailing fell 6.6%. The indexes for apparel, footwear, and accessories retailing; health, beauty, and optical goods retailing; airline passenger services; and deposit services (partial) also moved lower. Conversely, prices for portfolio management increased 1.7%. The indexes for long-distance motor carrying, machinery and equipment parts and supplies wholesaling, and loan services (partial) also advanced.

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The not-seasonally adjusted price indexes we track all rose 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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