February 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 0.4% in February (+0.4% expected) after rising 0.3% in January. The gasoline index continued to increase, rising 6.4% in February and accounting for over half of the seasonally adjusted increase in the all-items index. The electricity and natural gas indexes also increased, and the energy index rose 3.9% over the month. The food index rose 0.2% in February, with the index for food at home and the index for food away from home both rising.

The index for all items less food and energy rose 0.1% in February. The indexes for shelter, recreation, medical care, and motor vehicle insurance all increased over the month. The indexes for airline fares, used cars and trucks, and apparel all declined in February.

The all-items index rose 1.7% for the 12 months ending February, a larger increase than the 1.4% reported for the period ending in January. The index for all items less food and energy rose 1.3% over the last 12 months, a smaller increase than the 1.4% rise for the 12 months ending January. The food index rose 3.6% over the last 12 months, while the energy index increased 2.4% over that period.

Producer Price Index

The producer price index for final demand (PPI-FD) increased 0.5% in February (in line with expectations). This rise followed advances of 1.3% in January and 0.3% in December. Most of the February advance can be traced to a 1.4% rise in the index for final demand goods. Prices for final demand services increased 0.1%.

On an unadjusted basis, the final demand index moved up 2.8% for the 12 months ended in February, the largest increase since rising 3.1% for the 12 months ended October 2018. Prices for final demand less foods, energy, and trade services moved up 0.2% in February, the tenth consecutive advance. For the 12 months ended in February, the index for final demand less foods, energy, and trade services rose 2.2%, the largest increase since a 2.4% advance for the 12 months ended May 2019.

Final Demand

Final demand goods: The index for final demand goods rose 1.4% in February, the same as in January. Over two-thirds of the broad-based February increase can be traced to prices for final demand energy, which climbed 6.0%. The indexes for final demand goods less foods and energy and for final demand foods advanced 0.3% and 1.3%, respectively.

Product detail: Forty percent of the February increase in the index for final demand goods is attributable to gasoline prices, which jumped 13.1%. The indexes for diesel fuel, beef and veal, basic organic chemicals, residential electric power, and chicken eggs also moved higher. Conversely, prices for fresh and dry vegetables fell 16.7%. The indexes for iron and steel scrap and for distilled and bottled liquor (except brandy) also declined.

Final demand services: The index for final demand services inched up 0.1% in February after increasing 1.3% in January. Two-thirds of the February advance in prices for final demand services can be traced to a 1.1% rise in the index for final demand transportation and warehousing services. Margins for final demand trade services edged up 0.1%. (Trade indexes measure changes in margins received by wholesalers and retailers.) The index for final demand services less trade, transportation, and warehousing was unchanged.

Product detail: A 3.6% increase in the index for transportation of passengers (partial) was a major factor in the February advance in prices for final demand services. The indexes for securities brokerage, dealing, and investment advice; machinery and equipment parts and supplies wholesaling; health, beauty, and optical goods retailing; and hardware, building materials, and supplies retailing also moved higher. In contrast, margins for apparel, jewelry, footwear, and accessories retailing decreased 6.5%. The indexes for traveler accommodation services, machinery and vehicle wholesaling, and portfolio management also declined.

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.