May 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 May (+0.4% expected) after rising 0.8% in April. The index for used cars and trucks continued to rise sharply, increasing 7.3% in May. This increase accounted for about one-third of the seasonally adjusted all-items increase. The food index increased 0.4% in May, the same increase as in April. The energy index was unchanged in May, with a decline in the gasoline index again offsetting increases in the electricity and natural gas indexes.

The index for all items less food and energy rose 0.7% in May after increasing 0.9% in April. Many of the same indexes continued to increase, including used cars and trucks, household furnishings and operations, new vehicles, airline fares, and apparel. The index for medical care fell slightly, one of the few major component indexes to decline in May. 

Over the last 12 months, the all-items index increased 5.0% -- the largest 12-month increase since a 5.4% increase for the period ending August 2008; it has been trending up every month since January, when the 12-month change was 1.4%. The index for all items less food and energy rose 3.8% over the last 12 months, the largest 12-month increase since the period ending June 1992. The energy index rose 28.5% over the last 12-months, and the food index increased 2.2%.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) increased 0.8% in May (+0.6% expected). Final demand prices rose 0.6% in April and 1.0% in March. Nearly 60% of the May increase in the index for final demand can be traced to a 1.5% rise in prices for final demand goods. The index for final demand services moved up 0.6%. Prices for final demand less foods, energy, and trade services increased 0.7% in May, the same as in April.

On an unadjusted basis, the final demand index advanced 6.6% for the 12 months ended in May, the largest increase since 12-month data were first calculated in November 2010. For the 12 months ended in May, the index for final demand less foods, energy, and trade services climbed 5.3%, the largest increase since 12-month data were first calculated in August 2014.

Final Demand

Final demand goods: Prices for final demand goods advanced 1.5% in May after rising 0.6% in April. Over 40% of the broad-based increase in May can be traced to the index for final demand goods less foods and energy, which moved up 1.1%. Prices for final demand foods and for final demand energy also advanced, 2.6% and 2.2%, respectively.

Product detail: Within the index for final demand goods in May, prices for nonferrous metals rose 6.9%. The indexes for beef and veal; diesel fuel; gasoline; hay, hayseeds, and oilseeds; and motor vehicles also advanced. In contrast, prices for fresh fruits and melons declined 1.9%. The indexes for primary basic organic chemicals and for asphalt also moved lower.

Final demand services: Prices for final demand services rose 0.6% in May, the fifth consecutive increase. Forty% of the broad-based May advance can be traced to the index for final demand trade services, which moved up 0.7%. (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 also rose, 0.2% and 1.9%, respectively.

Product Detail: Over 40% of the May increase in the index for final demand services is attributable to margins for automobile retailing (partial), which jumped 27.3%. The indexes for truck transportation of freight; apparel, footwear, and accessories retailing; portfolio management; chemicals and allied products wholesaling; and hardware, building materials, and supplies retailing also rose. Conversely, margins for food retailing fell 3.6%. The indexes for traveler accommodation services and for airline passenger services also decreased.

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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.