March 2021 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 0.6% in March (+0.5% expected). The March one-month increase was the largest rise since a 0.6% increase in August 2012. The gasoline index continued to increase, rising 9.1% in March and accounting for nearly half of the seasonally adjusted increase in the all-items index. The natural gas index also rose, contributing to a 5.0% increase in the energy index over the month. The food index rose 0.1% in March, with the food at home index and the food away from home index both also rising 0.1%.

The index for all items less food and energy rose 0.3% in March. The shelter index increased in March as did the motor vehicle insurance index, the recreation index, and the household furnishings and operations index. Indexes which decreased over the month include apparel and education.

The all-items index rose 2.6% for the 12 months ending March, a much larger increase than the 1.7% reported for the period ending in February. The index for all items less food and energy rose 1.6% over the last 12 months, after increasing 1.3% over the 12 month period ending in February. The food index rose 3.5% over the last 12 months, while the energy index increased 13.2% over that period.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) increased 1.0% in March (+0.5% expected). Final-demand prices rose 0.5% in February and 1.3% in January. In March, almost 60% of the increase in the index for final demand can be traced to a 1.7% advance in prices for final-demand goods. The index for final-demand services moved up 0.7%.

The final-demand index moved up 4.2% for the 12 months ended in March, the largest advance since rising 4.5% for the 12 months ended September 2011. Prices for final demand less foods, energy, and trade services rose 0.6% in March following an increase of 0.2% in February. For the 12 months ended in March, the index for final demand less foods, energy, and trade services moved up 3.1%, the largest advance since climbing 3.1% for the 12 months ended September 2018.

Final Demand

Final demand goods: Prices for final demand goods rose 1.7% in March, the largest increase since the index began in December 2009. Sixty percent of the broad-based advance in March is attributable to prices for final demand energy, which jumped 5.9%. The indexes for final demand goods less foods and energy and for final demand foods moved up 0.9% and 0.5%, respectively.

Product detail: Over one-fourth of the March increase in the index for final demand goods can be traced to an 8.8% jump in gasoline prices. The indexes for diesel fuel, residential electric power, industrial chemicals, steel mill products, and processed poultry also moved higher. In contrast, beef and veal prices fell 4.3%. The indexes for fresh and dry vegetables and for surgical and medical instruments also declined.

Final demand services: The index for final demand services rose 0.7% in March, the third consecutive advance. Nearly half of the broad-based increase in March is attributable to margins for final demand trade services, which moved up 1.0%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services advanced 0.4% and 1.5%, respectively.

Product detail: Over 40% of the March increase in prices for final demand services can be traced to margins for machinery and vehicle wholesaling, which jumped 6.7%. The indexes for apparel, jewelry, footwear, and accessories retailing; transportation of freight and mail; portfolio management; loan services (partial); and food retailing also moved higher. Conversely, margins for health, beauty, and optical goods retailing decreased 4.2%. The indexes for automobiles and automobile parts retailing and for traveler accommodation services also declined.

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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.