January 2023 Consumer and Producer Price Indices (incl. Forest Products)

Click image for larger version

Consumer Price Index

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.5% in January (+0.4% expected) after increasing 0.1% in December (originally -0.1%). The index for shelter was by far the largest contributor to the monthly all-items increase, accounting for nearly half of the monthly all-items increase, with the indexes for food, gasoline, and natural gas also contributing. The food index increased 0.5% over the month with the food at home index rising 0.4%. The energy index increased 2.0% over the month as all major energy component indexes rose over the month.

The index for all items less food and energy rose 0.4% in January. Categories which increased in January include the shelter, motor vehicle insurance, recreation, apparel, and household furnishing s and operations indexes. The indexes for used cars and trucks, medical care, and airline fares were among those that decreased over the month.

The all-items index increased 6.4% for the 12 months ending January; this was the smallest 12-month increase since the period ending October 2021. The index for all items less food and energy rose 5.6% over the last 12 months, its smallest 12-month increase since December 2021. The energy index increased 8.7% for the 12 months ending January, and the food index increased 10.1% over the last year.

Starting with January 2023 data, BLS updated weights annually for the CPI based on a single calendar year of data, using consumer expenditure data from 2021. This reflects a change from prior practice of updating weights biennially using two years of expenditure data.

Each year with the release of the January CPI, seasonal adjustment factors are recalculated to reflect price movements from the just-completed calendar year. This routine annual recalculation resulted in revisions to seasonally adjusted indexes for the previous five years.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) increased 0.7% in January (+0.4% expected). Final demand prices declined 0.2% in December 2022 (originally -0.5%) and advanced 0.3% in November. On an unadjusted basis, the index for final demand rose 6.0% for the 12 months ended January 2023.

In January, a 1.2% rise in prices for final demand goods led the advance in the final demand index. Prices for final demand services also moved higher, increasing 0.4%.

The index for final demand less foods, energy, and trade services rose 0.6% in January 2023, the largest advance since moving up 0.9% in March 2022. For the 12 months ended in January 2023, prices for final demand less foods, energy, and trade services increased 4.5%.

Final Demand

Final demand goods: The index for final demand goods moved up 1.2% in January, the largest increase since rising 2.1% in June 2022. Most of the January advance is attributable to a 5.0% jump in prices for final demand energy. The index for final demand goods less foods and energy increased 0.6%. In contrast, prices for final demand foods fell 1.0%.

Product detail: Nearly one-third of the January rise in the index for final demand goods can be traced to prices for gasoline, which increased 6.2%. The indexes for residential natural gas, diesel fuel, jet fuel, soft drinks, and motor vehicles also moved higher. Conversely, prices for fresh and dry vegetables decreased 33.5%. The indexes for residual fuels and for basic organic chemicals also declined.

Final demand services: The index for final demand services advanced 0.4% in January, the same as in December. Over 80% of the broad-based increase in January is attributable to prices for final demand services less trade, transportation, and warehousing, which rose 0.6%. Margins for final demand trade services moved up 0.2%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services also advanced 0.2%.

Product detail: A major factor in the January rise in prices for final demand services was the index for hospital outpatient care, which jumped 1.4%. The indexes for automobiles and automobile parts retailing; health, beauty, and optical goods retailing; portfolio management; chemicals and allied products wholesaling; and airline passenger services also moved higher. In contrast, margins for fuels and lubricants retailing fell 17.5%. Prices for long-distance motor carrying and for securities brokerage, dealing, and investment advice also declined. 

Click image for larger version

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

Click image for larger version

Effective with the release of data for January 2023, the PPI includes data for 25 resampled industries classified according to the 2022 North American Industry Classification System (NAICS). The BLS periodically updates the sample of producers providing data for the PPI to reflect current conditions more accurately when the structure, membership, technology, or product mix of an industry shifts.

In addition, seasonal adjustment factors have been recalculated to reflect price-movement patterns during 2022 for the Final Demand-Intermediate Demand (FD-ID) system and commodity-grouping indexes. This routine annual recalculation may affect previously published seasonally adjusted indexes and percent changes for January 2018 through December 2022.

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.