May 2023 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) rose 0.1% in May (+0.2% expected), after increasing 0.4% in April. The index for shelter was the largest contributor to the monthly all-items increase, followed by an increase in the index for used cars and trucks. The food index increased 0.2% in May after being unchanged in the previous two months. The index for food at home rose 0.1% over the month while the index for food away from home rose 0.5%. The energy index, in contrast, declined 3.6% in May as the major energy component indexes fell.

The index for all items less food and energy rose 0.4% in May, as it did in April and March. Indexes which increased in May include shelter, used cars and trucks, motor vehicle insurance, apparel, and personal care. The index for household furnishings and operations and the index for airline fares were among those that decreased over the month.

The all-items index increased 4.0% for the 12 months ending May; this was the smallest 12-month increase since the period ending March 2021. The index for all items less food and energy rose 5.3% over the last 12 months. The energy index decreased 11.7% for the 12 months ending May, and the food index increased 6.7% over the last year.

Producer Price Index

The Producer Price Index for final demand (PPI-FD) declined 0.3% in May (-0.1% expected). Final demand prices rose 0.2% in April and fell 0.4% in March. On an unadjusted basis, the index for final demand moved up 1.1% for the 12 months ended in May.

In May, the decline in the final demand index can be traced to prices for final demand goods, which fell 1.6%. The index for final demand services increased 0.2%.

Prices for final demand less foods, energy, and trade services were unchanged in May after inching up 0.1% in April. For the 12 months ended in May, the index for final demand less foods, energy, and trade services increased 2.8%.

Final Demand

Final demand goods: Prices for final demand goods moved down 1.6% in May, the largest decrease since falling 1.6% in July 2022. Most of the May decline is attributable to the index for final demand energy, which dropped 6.8%. Prices for final demand foods moved down 1.3%. In contrast, the index for final demand goods less foods and energy increased 0.1%.

Product detail: Sixty percent of the May decline in the index for final demand goods can be traced to a 13.8% drop in prices for gasoline. The indexes for diesel fuel, chicken eggs, jet fuel, fresh and dry vegetables, and iron and steel scrap also fell. Conversely, prices for tobacco products advanced 1.7%. The indexes for electric power and for beverages and beverage materials also increased.

Final demand services: The index for final demand services moved up 0.2% in May following a 0.3% advance in April. Leading the May increase, margins for final demand trade services rose 1.0%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing edged up 0.1%. In contrast, the index for final demand transportation and warehousing services declined 1.4%.

Product detail: Over 40% of the May increase in prices for final demand services can be attributed to margins for automobiles and automobile parts retailing, which rose 4.2%. The indexes for fuels and lubricants retailing; apparel, footwear, and accessories retailing; securities brokerage, dealing, investment advice, and related services; machinery and vehicle wholesaling; and food wholesaling also advanced. Conversely, prices for truck transportation of freight fell 2.1%. The indexes for portfolio management and for health, beauty, and optical goods retailing also decreased.

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The not-seasonally adjusted price indexes we track all declined on a MoM basis, and most also did so on a 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.