July 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 0.5% in July (+0.5% expected) after rising 0.9% in June. The indexes for shelter, food, energy, and new vehicles all increased in July and contributed to the monthly all-items seasonally adjusted increase. The food index increased 0.7% in July as five of the major grocery store food group indexes rose, and the food away from home index increased 0.8%. The energy index rose 1.6% in July, as the gasoline index increased 2.4% and other energy component indexes also rose.

The index for all items less food and energy rose 0.3% in July after increasing 0.9% in June. Along with shelter and new vehicles, the indexes for recreation, for medical care, and for personal care increased in July. The index for used cars also increased in July, but the 0.2% advance was much smaller than in recent months. The index for motor vehicle insurance declined in July, and the index for airline fares fell slightly.

The all-items index rose 5.4% for the 12 months ending July, the same increase as the period ending June. The index for all items less food and energy rose 4.3% over the last 12 months, while the energy index rose 23.8%. The food index increased 3.4% for the 12 months ending July, compared to a 2.4% rise for the period ending June.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) increased 1.0% in July (+0.6% expected). Final demand prices rose 1.0% in June and 0.8% in May. Nearly three-fourths of the July increase in the final demand index can be traced to a 1.1% advance in prices for final demand services. The index for final demand goods rose 0.6%.

On an unadjusted basis, the final demand index moved up 7.8% for the 12 months ended in July, the largest advance since 12-month data were first calculated in November 2010. Prices for final demand less foods, energy, and trade services moved up 0.9% in July, the largest advance since climbing 1.0% in January. For the 12 months ended in July, the index for final demand less foods, energy, and trade services rose 6.1%, the largest increase since 12-month data were first calculated in August 2014.

Final Demand

Final demand services: The index for final demand services rose 1.1% in July, the largest one-month increase since data were first calculated in December 2009. Nearly half of the broad-based advance in July is attributable to margins for final demand trade services, which jumped 1.7%. (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 moved higher, 0.6% and 2.7%, respectively.

Product detail: About 20% of the July advance in prices for final demand services can be traced to margins for automobiles and automobile parts retailing, which climbed 11.2%. The indexes for airline passenger services; hospital outpatient care; machinery and equipment wholesaling; traveler accommodation services; and securities brokerage, dealing, investment advice, and related services also increased. In contrast, prices for portfolio management fell 1.8%. The indexes for chemicals and allied products wholesaling and for fuels and lubricants retailing also declined.

Final demand goods: The index for final demand goods moved up 0.6% in July following a 1.2% jump in June. Leading the July advance in prices for final demand goods, the index for final demand goods less foods and energy increased 1.0%. Prices for final demand energy rose 2.6%. Conversely, the index for final demand foods decreased 2.1%.

Product detail: Among prices for final demand goods in July, the index for tobacco products increased 2.7%. Prices for gasoline; diesel fuel; gas fuels; consumer, institutional, and commercial plastic products; and eggs for fresh use also moved higher. In contrast, the index for beef and veal fell 11.6%. Prices for residential electric power and for softwood lumber (not edge worked) also declined.

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The not-seasonally adjusted price indexes we track were mixed on a MoM basis but all rose on a YoY basis.

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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.