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Macro Pulse highlights recent activity and events expected to affect the U.S. economy over the next 24 months. While the review is of the entire U.S. economy its particular focus is on developments affecting the Forest Products industry. Everyone with a stake in any level of the sector can benefit from
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Tuesday, June 14, 2022

May 2022 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 1.0% in May (+0.7% expected) after rising 0.3% in April. The increase was broad-based, with the indexes for shelter, gasoline, and food being the largest contributors. After declining in April, the energy index rose 3.9% over the month with the gasoline index rising 4.1% and the other major component indexes also increasing. The food index rose 1.2% in May as the food at home index increased 1.4%. 

The index for all items less food and energy rose 0.6% in May, the same increase as in April. While almost all major components increased over the month, the largest contributors were the indexes for shelter, airline fares, used cars and trucks, and new vehicles. The indexes for medical care, household furnishings and operations, recreation, and apparel also increased in May.

The all-items index increased 8.6% for the 12 months ending May, the largest 12-month increase since the period ending December 1981. The index of all items less food and energy rose 6.0% over the last 12 months. The energy index rose 34.6% over the last year, the largest 12-month increase since the period ending September 2005. The food index increased 10.1% for the 12 months ending May, the first increase of 10% or more since the period ending March 1981.

 

Producer Price Index

The Producer Price Index for final demand (PPI-FD) increased 0.8% in May (+0.8% expected). This rise followed advances of 0.4% in April and 1.6% in March. On an unadjusted basis, final demand prices moved up 10.8% for the 12 months ended in May.

In May, nearly two-thirds of the rise in the index for final demand was due to a 1.4% advance in prices for final demand goods. The index for final demand services increased 0.4%.

Prices for final demand less foods, energy, and trade services moved up 0.5% in May after increasing 0.4% in April. For the 12 months ended in May, the index for final demand less foods, energy, and trade services rose 6.8%.

Final Demand

Final demand goods: The index for final demand goods moved up 1.4% in May, the fifth consecutive rise. Over 70% of the increase in May can be traced to a 5.0% advance in prices for final demand energy. The index for final demand goods less foods and energy moved up 0.7%, while prices for final demand foods were unchanged.

Product detail: Forty percent of the May increase in prices for final demand goods can be attributed to an 8.4% advance in the index for gasoline. Prices for jet fuel, residential natural gas, steel mill products, diesel fuel, and processed young chickens also moved higher. Conversely, the index for beef and veal fell 9.5%. Prices for iron and steel scrap and for commercial electric power also decreased.

Final demand services: The index for final demand services moved up 0.4% in May following a 0.2% decrease in April. Over half of the broad-based advance can be traced to a 2.9% rise in prices for final demand transportation and warehousing services. The indexes for final demand trade services and for final demand services less trade, transportation, and warehousing also moved higher, 0.4% and 0.1%, respectively. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: Nearly 30% of the May increase in the index for final demand services can be attributed to prices for truck transportation of freight, which rose 2.9%. The indexes for services related to securities brokerage and dealing (partial), machinery and equipment wholesaling, chemicals and allied products wholesaling, automobiles and automobile parts retailing, and transportation of passengers (partial) also advanced. In contrast, margins for fuels and lubricants retailing declined 21.7%. The indexes for portfolio management and for guestroom rental also moved lower.

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The not-seasonally adjusted price indexes we track all rose MoM; only softwood lumber fell YoY.

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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.

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