December 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) declined 0.1% in December (0.0% expected) after increasing 0.1% in November. The index for gasoline was by far the largest contributor to the monthly all-items decrease, more than offsetting increases in shelter indexes. The food index increased 0.3% over the month with the food at home index rising 0.2%. The energy index decreased 4.5% over the month as the gasoline index declined while other major energy component indexes increased.

The index for all items less food and energy rose 0.3% in December, after rising 0.2% in November. Indexes which increased in December include the shelter, household furnishings and operations, motor vehicle insurance, recreation, and apparel indexes. The indexes for used cars and trucks, and airline fares were among those that decreased over the month.

The all-items index increased 6.5% for the 12 months ending December; this was the smallest 12-month increase since the period ending October 2021. The index for all items less food and energy rose 5.7% over the last 12 months. The energy index increased 7.3% for the 12 months ending December, and the food index increased 10.4% over the last year; all of these increases were smaller than for the 12-month period ending November.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) declined 0.5% in December (-0.1% expected), reversing advances of 0.2% in November and 0.4% in October. December’s decrease in the final demand index can be attributed to a 1.6% decline in prices for final demand goods. In contrast, the index for final demand services rose 0.1%.

On an unadjusted basis, the index for final demand increased 6.2% in 2022 after rising 10.0% in 2021. Prices for final demand less foods, energy, and trade services edged up 0.1% in December after increasing 0.3% in November. The index for final demand less foods, energy, and trade services advanced 4.6% in 2022 following a 7.0% rise in 2021.

Final Demand

Final demand goods: Prices for final demand goods moved down 1.6% in December, the largest decrease since falling 1.8% in July. Leading the December decline, the index for final demand energy dropped 7.9%. Prices for final demand foods decreased 1.2%. Conversely, the index for final demand goods less foods and energy advanced 0.2%.

Product detail: Nearly half of the December decrease in the index for final demand goods can be traced to a 13.4% decline in prices for gasoline. The indexes for diesel fuel; jet fuel; fresh and dry vegetables; canned, cooked, smoked, or prepared poultry; and basic organic chemicals also fell. In contrast, prices for carbon steel scrap increased 8.3%. The indexes for chicken eggs and for electric power also moved higher.

Final demand services: Prices for final demand services edged up 0.1% in December after rising 0.2% in November. The December increase can be traced to margins for final demand trade services, which advanced 0.3%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Conversely, the index for final demand transportation and warehousing services fell 0.2%, while prices for final demand services less trade, transportation, and warehousing were unchanged.

Product detail: A major factor in the December increase in prices for final demand services was a 17.6% jump in margins for fuels and lubricants retailing. The indexes for deposit services (partial), airline passenger services, inpatient care, and professional and commercial equipment wholesaling also moved higher. In contrast, prices for truck transportation of freight decreased 1.7%. The indexes for residential real estate loans (partial), machinery and vehicle wholesaling, and guestroom rental also fell.

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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 purposes of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.