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.
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.
The not-seasonally adjusted price indexes we track all rose MoM; only softwood lumber fell YoY.
The foregoing comments represent the
general economic views and analysis of
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