November 2018 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) was unchanged in November (0.0% expected). The gasoline index declined 4.2% in November, offsetting increases in an array of indexes including shelter and used cars and trucks. Other major energy component indexes were mixed, with the index for fuel oil falling but the indexes for electricity and natural gas rising. The food index rose in November, with the indexes for food at home and food away from home both increasing. 

The all items less food and energy index increased 0.2% in November. Along with the indexes for shelter and used cars and trucks, the indexes for medical care, recreation, and water and sewer and trash collection also increased. The indexes for wireless telephone services, airline fares, and motor vehicle insurance declined in November.

The all-items index increased 2.2% for the 12 months ending November, compared to a 2.5% increase for the period ending October. The all items less food and energy index rose 2.2% in November. The energy index increased 3.1% for the 12 months ending November; this was its smallest 12-month increase since the period ending June 2017. The food index rose 1.4% over the last 12 months. 

Producer Price Index

The Producer Price Index for final demand (PPI) edged up 0.1% in November (0.0% expected). Final demand prices advanced 0.6% in October and 0.2% in September. The rise in the final demand index can be traced to a 0.3% increase in prices for final demand services. In contrast, the index for final demand goods decreased 0.4%.

The final demand index moved up 2.5% for the 12 months ended in November. The index for final demand less foods, energy, and trade services moved up 0.3% in November, the third consecutive increase. For the 12 months ended in November, prices for final demand less foods, energy, and trade services advanced 2.8%.

Final Demand

Final demand services: The index for final demand services moved up 0.3% in November, the third straight rise. The broad-based November advance was led by a 0.3% increase in the index for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services climbed 1.2%, and the index for final demand services less trade, transportation, and warehousing inched up 0.1%.

Product detail: Most of the November advance in prices for final demand services can be traced to margins for fuels and lubricants retailing, which jumped 25.9%. The indexes for health, beauty, and optical goods retailing; cellular phone and other wireless telecommunications services; airline passenger services; food wholesaling; and truck transportation of freight also moved higher. Conversely, prices for guestroom rental fell 3.5%. The indexes for machinery and equipment wholesaling and for portfolio management also declined.

Final demand goods: The index for final demand goods moved down 0.4% in November, the largest decrease since falling 0.5% in May 2017. The November decline was the result of a 5.0% drop in the index for final demand energy. In contrast, prices for final demand goods less foods and energy climbed 0.3%, and the index for final demand foods advanced 1.3%.

Product detail: Leading the November decrease in the index for final demand goods, gasoline prices dropped 14.0%. The indexes for liquefied petroleum gas, electric power, fresh fruits and melons, jet fuel, and primary basic organic chemicals also moved down. Conversely, the index for pharmaceutical preparations rose 1.5%. Prices for fresh and dry vegetables and for residential natural gas also increased. 

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The not-seasonally adjusted price indexes we track were mixed on both MoM and YoY bases. Most noteworthy are the MoM and YoY decreases in softwood lumber. 

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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.