August 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 0.3% in August (+0.4% expected) after rising 0.5% in July. The indexes for gasoline, household furnishings and operations, food, and shelter all rose in August and contributed to the monthly all-items seasonally adjusted increase. The energy index increased 2.0%, mainly due to a 2.8% increase in the gasoline index. The index for food rose 0.4%, with the indexes for food at home and food away from home both increasing 0.4%.

The index for all items less food and energy rose 0.1% in August, its smallest increase since February 2021. Along with the indexes for household operations and shelter, the indexes for new vehicles, recreation, and medical care also rose in August. The indexes for airline fares, used cars and trucks, and motor vehicle insurance all declined over the month. 

The all-items index rose 5.3% for the 12 months ending August, a smaller YoY increase than the 5.4% rise for the period ending July. The index for all items less food and energy rose 4.0% over the last 12 months, also a smaller increase than the period ending July. The energy index rose 25.0% over the last 12 months, and the food index increased 3.7%; both were larger than the increases for the 12-month period ending July.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) increased 0.7% in August (+0.6% expected). Final demand prices moved up 1.0% in July, the same as in June. Leading the August increase in the index for final demand, prices for final demand services rose 0.7%. The index for final demand goods moved up 1.0%. Prices for final demand less foods, energy, and trade services moved up 0.3% in August after increasing 0.9% in July.

On an unadjusted basis, the final demand index rose 8.3% for the 12 months ended in August, the largest advance since 12-month data were first calculated in November 2010. For the 12 months ended in August, the index for final demand less foods, energy, and trade services rose 6.3%, the largest advance since 12-month data were first calculated in August 2014.

Final Demand

Final demand services: Prices for final demand services moved up 0.7% in August, the eighth consecutive advance. Two-thirds of the broad-based increase in August can be traced to the index for final demand trade services, which rose 1.5%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services and for final demand services less trade, transportation, and warehousing climbed 2.8% and 0.1%, respectively.

Product detail: Over 30% of the August increase in prices for final demand services can be traced to a 7.8% rise in margins for health, beauty, and optical goods retailing. The indexes for transportation of passengers (partial), chemicals and allied products wholesaling, bundled wired telecommunications access services, machinery and equipment parts and supplies wholesaling, and traveler accommodation services also moved higher. Conversely, prices for hospital outpatient care fell 1.5%. The indexes for hardware, building materials, and supplies retailing and for securities brokerage, dealing, investment advice, and related services also decreased. (See table 4.)

Final demand goods: The index for final demand goods moved up 1.0% in August after increasing 0.6% in July. In August, half of the broad-based advance can be attributed to a 2.9% rise in prices for final demand foods. The indexes for final demand goods less foods and energy and for final demand energy also moved higher, 0.6% and 0.4%, respectively.

Product detail: About a quarter of the August advance in prices for final demand goods can be attributed to an 8.5% rise in the index for meats. Prices for residential natural gas, industrial chemicals, processed young chickens, motor vehicles, and steel mill products also moved higher. In contrast, the index for iron and steel scrap decreased 3.7%. Prices for diesel fuel and for natural, processed, and imitation cheese also moved lower.

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The not-seasonally adjusted price indexes we track were mixed on both a MoM and 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.