January 2021 Consumer and Producer Price Indices (incl. Forest Products)

Click image for larger version

Consumer Price Index

The consumer price index for all urban consumers (CPI-U) increased 0.3% in January (+0.3% expected). The gasoline index continued to increase, rising 7.4% in January and accounting for most of the seasonally adjusted increase in the all items index. Although the indexes for electricity and natural gas declined, the energy index rose 3.5% over the month. The food index rose slightly in January, increasing 0.1% as an advance in the index for food away from home more than offset a decline in the index for food at home.

The index for all items less food and energy was unchanged in January. The indexes for apparel, medical care, shelter, and motor vehicle insurance all increased over the month. The indexes for recreation, used cars and trucks, airline fares, and new vehicles all declined in January.

The all items index rose 1.4% for the 12 months ending January, the same increase as for the period ending in December. The index for all items less food and energy also rose 1.4% over the last 12 months, a smaller increase than the 1.6% rise for the 12 months ending December. The food index rose 3.8% over the last 12 months. In contrast to these increases, and despite rising in recent months, the energy index declined 3.6% over the last year.

 

Producer Price Index

The producer price index for final demand (PPI-FD) increased 0.3% in December. 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 producer price index for final demand (PPI-FD) increased 1.3% in January (+0.4% expected). This advance is the largest since the index began in December 2009. Final demand prices rose 0.3% in December and 0.1% in November. Two-thirds of the January advance in prices for final demand can be traced to a 1.3% rise in the index for final demand services. Prices for final demand goods increased 1.4%.

On an unadjusted basis, the index for final demand moved up 1.7% for the 12 months ended January 2021, the largest increase since climbing 2.0% for the 12 months ended January 2020. Prices for final demand less foods, energy, and trade services moved up 1.2% in January, the largest advance since the index began in September 2013. For the 12 months ended in January, prices for final demand less foods, energy, and trade services rose 2.0%, the largest increase since a 2.1% advance for the 12 months ended June 2019.

Final Demand

Final demand services: Prices for final demand services rose 1.3% in January, the largest advance since the index began in December 2009. Over 70% of the broad-based January increase is attributable to a 1.4% jump in prices for final demand services less trade, transportation, and warehousing. The indexes for final demand trade services and for final demand transportation and warehousing services also moved higher, 1.0% and 1.3%, respectively. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product Detail: One-fourth of the January advance in the index for final demand services can be traced to a 9.4% rise in prices for portfolio management. The indexes for outpatient care (partial); guestroom rental; machinery and vehicle wholesaling; apparel, jewelry, footwear, and accessories retailing; and truck transportation of freight also moved higher. Conversely, margins for automobile retailing (partial) fell 7.7%. The indexes for food retailing and for property and casualty insurance also declined. (See table 4.)

Final demand goods: Prices for final demand goods moved up 1.4% in January, the largest increase since the index jumped 1.4% in May 2020. Nearly 60% of the broad-based January advance is attributable to a 5.1% rise in prices for final demand energy. The indexes for final demand goods less foods and energy and for final demand foods also climbed, 0.8% and 0.2%, respectively.

Product Detail: Forty percent of the January increase in prices for final demand goods can be traced to a 13.6% jump in the index for gasoline. Prices for iron and steel scrap, oilseeds, industrial chemicals, diesel fuel, and light motor trucks also rose. In contrast, the index for beef and veal declined 8.4%. Prices for fresh and dry vegetables and for search, detection, navigation, and guidance systems and equipment also fell.

Click image for larger version

The not-seasonally adjusted price indexes we track all rose on both MoM and YoY bases.

Click image for larger version

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.