May’s consumer and producer prices; April’s wholesale sales

Major reports released during the past week included the May Consumer Price Index, the May Producer Price Index and the May Import-Export Price Index, all from the Bureau of Labor Statistics…in addition, we will also briefly review the the Wholesale Trade, Sales and Inventories report for April from the Census Bureau, which we neglected to do when it was released on Friday of last week…

CPI unchanged in May as Lower Gasoline Prices Offset Higher Rent

The consumer price index was unchanged in May, as higher prices for rent, medical care services, drugs, used vehicles, and food away from home were offset by lower prices for gasoline, clothing, new vehicles, airline fares, video services, furniture, and information technology commodities, including smartphones….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the weighted average of seasonally adjusted prices of consumer goods and services was unchanged in May, after being 0.3% higher in April, 0.4% higher in March, 0.4% higher in February, 0.3% higher in January, 0.2% higher in December, 0.2% higher in November, 0.1% higher in October, 0.4% higher in September, after rising by 0.5% in August, by 0.2% in July, by 0.2% in June, and by 0.1% in May of last year….

The unadjusted CPI-U index, which was originally set to have prices of the 1982 to 1984 period equal to 100, rose from 313.548 in April to 314.069 in May, which left it statistically 3.32690% higher than the index reading of 304.127 in May​ of last year, which is reported as a 3.3% year over year increase, down from the 3.4% year over year increase reported for April, with such widely cited year over year figures usually telling us more about last year’s CPI changes than this years…with lower energy prices the main reason for the lower CPI print, seasonally adjusted core prices, which exclude food and energy, were up by 0.2% for the month, as the unadjusted core price index rose from 317.978 to 318.629, which left the core index 3.41874% ahead of its year ago reading of 308.096, which is reported as a 3.4% year over year increase, which ​was less than the 3.6% year over year core price increase that was reported in April, and well below the 6.6% annual increase reported for September 2022, which had been the largest annual increase in core prices in forty years..

The volatile seasonally adjusted energy price index fell 2.0% in May, after rising by 1.1% in April, by 1.1% in March and by 2.3% in February, but after falling by 0.9% in January, by 0.2% in December, by 1.6% in November and by 2.1% in October, but after rising by 1.2% in September, rising by 4.4% in August, and after being unchanged last July, and is now 2.1% higher than in May of a year ago….the price index for energy commodities was 3.5% lower in May, while the price index for energy services was 0.2% lower, after​ the services ​index had fallen by 0.7% in April….the energy commodity index was down 3.5% on a 3.6% decrease in the price of gasoline and a 0.4% decrease in the price of fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, average​d 0.3% lower…within energy services, the price index for utility gas service was 0.8% lower in May after being 2.9% lower in April, but is still 0.2% higher than it was a year ago, while the electricity price index was unchanged in May after falling 0.1% in April… energy commodities are now averaging 2.2% higher than their year ago levels, with gasoline prices averaging 2.2% higher than they were a year ago, while the energy services price index is up 4.7% from last May, as electricity prices are averaging 5.9% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was 0.1% higher in May, after being unchanged in April, 0.1% higher in March, unchanged in February, 0.4% higher in January, 0.2% higher in December, 0.2% higher in November, 0.3% higher in October, 0.2% higher in September, 0.2% higher in August, and 0.2% higher in July​ of last year, as the price index for food purchased for use at home was unchanged​ in May, after being 0.2% lower in April, unchanged in February and March, but after being 0.4% higher in January, while the price index for food bought to eat away from home was 0.4% higher, as average prices at fast food outlets rose 0.2%, average prices at full service restaurants rose 0.4%, and prices of other food away from home averaged 0.8% higher…

In the food at home categories, the price index for cereals and bakery products was 0.2% higher, as bread prices rose 1.1%, the price index for breakfast cereal rose 0.4%, the price index for crackers and bread​ and cracker products rose 1.1% and the price index for fresh biscuits, rolls, muffins was 2.4% higher…at the same time, the price index for the meats, poultry, fish, and eggs food group was 0.2% higher, as the price index for pork rose 0.9% and chicken prices were 1.0% higher….on the other hand, the seasonally adjusted price index for dairy products was 0.5% lower, as average milk prices fell 1.3%, the price index for cheese and related products was 0.5% lower, the price index for ice cream and related products was 0.8% lower…. however, the fruits and vegetables price index was unchanged, as the price index for fresh fruits rose 0.4%, the price index for fresh vegetables fell 0.4%, canned fruit prices averaged 0.6% higher, and canned vegetable prices averaged 1.5% lower….meanwhile, the beverages price index was 0.3% lower, as the price index for carbonated drinks was 2.0% lower and the price index for coffee was 0.6% lower….lastly, the price index for the ‘other foods at home’ category was unchanged, as the price index for soups rose 1.2%, the price index for snacks rose 0.7%, and the price index for peanut butter rose 2.6%, while the price index for margarine fell 2.7%, the price index for baby food and formula fell 1.3%, and the price index for salt and other seasonings and spices was 2.1% lower…

Among the seasonally adjusted core components of the CPI, which rose by 0.2% in May, after rising by 0.3% in April, by 0.4% in March, by 0.4% in February, by 0.4% in January, by 0.3% in December, by 0.3% in November, by 0.2% in October, by 0.3% in September, by 0.2% in August, and by 0.2% last July, the composite price index of all goods less food and energy goods was unchanged in May, while the more heavily weighted composite for all services less energy services was 0.2% higher….

Among the goods components of the core price index, which will be used by the Bureau of Economic Analysis to adjust ​May’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was unchanged, as the price index for laundry equipment rose 1.0%, the price index for outdoor equipment and supplies rose 0.9%, and the price index for indoor plants and flowers rose 1.1% while the price index for furniture and bedding fell 0.6%, the price index for floor coverings fell 2.7%, and the major appliance index was 1.0% lower….at the same time, the apparel price index was 0.3% lower on a 3.5% decrease in the price index for women’s outerwear, a 2.0% decrease in the price index for girls' apparel, a 2.2% decrease in the price index for infants' and toddlers' apparel, and a 1.0% decrease in the price index for boys' and girls' footwear…. in addition, the price index for transportation commodities other than fuel was was 0.1% lower​, even though the price index for used cars and trucks rose 0.6%, as average prices for new vehicles was 0.5% lower and the price index for motor oil, coolant, and fluids was 2.0% lower….on the other hand, the price index for medical care commodities was 1.3% higher as prescription drug prices rose 2.1% and the price index for medical equipment and supplies was 0.7% higher…however, the recreational commodities index was 0.1% lower, as the price index for sports equipment fell 0.7%, the price index for recreational reading materials fell 1.0%, and the price index for toys, games, hobbies and playground equipment was 0.6% lower… in addition, the education and communication commodities index was 1.6% lower, on a 3.9% decrease in the price index for computer software and accessories, a 2.4% decrease in the price index for telephone hardware, calculators, and other consumer information items, and a 1.1% decrease in the price index for computers, peripherals, and smart home assistants.…lastly, a separate price index just for alcoholic beverages was 0.1% higher, while the price index for ‘other goods’ was 0.5% higher on a a 1.6% increase in the price index for cigarettes…

Within core services, the price index for shelter was 0.4% higher, as rents rose 0.4%, homeowner’s equivalent rent was 0.4% higher, prices for lodging away from home at hotels and motels were 0.2% lower, the price index household insurance was 0.5% higher, and the price index for water, sewers and trash collection was 0.1% higher….at the same time, the price index for medical care services was 0.3% higher, as the price index for outpatient hospital services rose 0.5%, the price index for nursing homes and adult day services rose 0.6%, the price index for dental care rose 1.2%, and the price index for health insurance was 0.5% higher….on the other hand, the transportation services price index was 0.5% lower, as the price index for car and truck rental fell 1.2%, the price index for airline fares fell 3.6%, the price index for other intercity transportation fell 1.3%. and the price index for motor vehicle body work was 0.9% lower…in addition, the recreation services price index was 0.2% lower, as the price index for admissions to movies, theaters, and concerts fell 0.6%, the price index for cable, satellite, and live streaming television service fell 1.2%, the price index for photographers and photo processing fell 2.8%, and the price index for purchase, subscription, and rental of video was 1.9% lower….however, the price index for education and communication services was 0.3% higher, as the price index for ay care and preschool rose 0.6%, the price index for elementary and high school tuition and fees also rose 0.6%, and the price index for residential telephone services was 1.2% higher…lastly, the index for other personal services fell 0.3%, as the price index for funeral expenses fell 0.5%, and the price index for tax return preparation and other accounting fees was 0.1% lower..

NB: a note on the reporting of consumer prices: most of the media, and even some economists, have been reporting the change in consumer inflation as a change from annual figures of one month to the next…that’s a misleading and sometimes nonsensical way of reporting it, because it often tells you more about what the inflation figures were during the same month of a year ago than in the current month…by way of illustrating the problem, let’s imagine that CPI figures in 2023 started with a 0.6% increase in January, then were unchanged in February, increased 0.6% again in March, then were unchanged again in April 2023, then rose 0.6% again in May of 2023, then continued alternating between rising 0.6% and being unchanged each month over the rest of the year…in 2024, however, we will postulate that inflation leveled off at a 0.3% increase every month in our hypothetical example…both years would show a 3.6% annual gain, maybe closer to 3.7% with compounding…but those who report inflation as a change between the annual figures would have reported inflation at 3.3% in January 2024 (because the January 2023 0.6% increase had dropped out of the comparison), then would have reported a 3.6% increase in February, then a 3.3% increase in March, and would report a 3.6% increase again in April, even if month over month inflation for 2024 stays unchanged at 0.3%…hence, when March 2024 inflation at 0.4% replaced March 2023 inflation at 0.1% in the actual data, it was widely reported that our inflation rose from 3.2% to 3.5%…then in April, our 0.3% CPI increase replaced the 0.4% increase in April 2023 in the annual change, and they reported that inflation fell from 3.5% to 3.4%…now in May, our unchanged CPI replaced the 0.1% increase of last May, and ​thus they are reporting that inflation fell from 3.4% to 3.3%…

Producer Prices Fell 0.2% in May on Lower Energy, Transportation Services

The seasonally adjusted Producer Price Index (PPI) for final demand fell 0.2% in May, as the price index for finished wholesale goods fell 0.8% while the price index for final demand for services was unchanged…that May decrease followed a revised 0.5% increase in April, when the price index for finished wholesale goods rose 0.4% while the price index for final demand for services was 0.6% higher, a revised 0.1% PPI decrease in March, when the price index for wholesale goods fell 0.1% and the price index for final demand for services was unchanged, a revised 0.6% PPI increase in February, when the price index for wholesale goods rose 1.1% and the price index for final demand for services was 0.4% higher, a revised 0.4% PPI increase in January, when the price index for finished wholesale goods fell 0.1%, while the price index for final demand for services was 0.6% higher; a 0.1% PPI decrease in December, when the index for prices of wholesale goods was 0.1% lower and the price index for final demand for services was 0.1% lower; an unrevised 0.1% PPI increase in November, when the average of prices for wholesale goods was 0.2% lower, while the price index for final demand for services was 0.2% higher; and an unrevised 0.3% PPI decrease in October, when the weighted average of prices for wholesale goods was 1.2% lower while the price index for final demand for services was 0.1% higher, and an unrevised 0.2% increase in September, when the weighted average of prices for wholesale goods was 0.9% higher and the price index for final demand for services was 0.1% lower….on an unadjusted basis, producer prices are still 2.2% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was unchanged for the month, and is now 3.2% higher than it was a year ago…

As noted, the producer price index for final demand for goods was 0.8% lower in May, after being 0.4% higher in April, 0.1% lower in March, 1.1% higher in February, 0.1% lower in January, 0.1% lower in December, 0.2% lower in November, 1.2% lower in October. 0.9% higher in September, 1.7% higher in August, and 0.2% higher ​last July, and is still up 1.6% from a year ago….the final demand goods price index was down 0.8% in May as the price index for wholesale energy goods was 4.8% lower, after it had risen 2.0% in April, fallen 1.3% in March, risen 3.9% in February, after falling 1.1% in January, by 0.8% in December, by 2.0% in November, and by 6.4% in October, while the price index for wholesale foods was 0.7% lower, after falling 0.6% in April, rising 0.4% in March and 1.0% in February, but after falling 0.3% in January, being unchanged in December and after rising 0.7% in November, while the index for final demand for core wholesale goods (excluding food and energy) was 0.3% higher, after rising 0.2% in April, being unchanged in March and 0.4% higher in February…

Wholesale energy prices were down 4.8% in May on a 7.1% decrease in wholesale prices for gasoline, a 24.5% decrease in wholesale prices for diesel fuel, and a 7.3% decrease in wholesale prices for home heating oil and distillates, while the final demand for food price index was 0.1% lower on an 34.8% decrease in the wholesale price index for eggs for fresh use, a 1.6% decrease in the wholesale price index for beef and veal, and a 2.1% decrease in the wholesale price index for fresh fruits and melons….among core wholesale goods, the wholesale price index for iron and steel scrap rose 1.0%, the wholesale price index for sporting and athletic goods increased 2.0%, the wholesale price index for cigarettes rose 3.3%, and the wholesale price index for jewelry, platinum and karat gold was 1.1% higher…

Meanwhile, the price index for final demand for services was unchanged in May, after being 0.6% higher in April, unchanged in March, 0.4% higher in February, and 0.6% higher in January, after being 0.1% lower in December, 0.2% higher in November, 0.1% higher in October, but 0.1% lower in September, 0.2% higher in August, and 0.8% higher last July, and is now 2.6% higher than a year ago…the price index for final demand for trade services rose 0.2%, the price index for final demand for transportation and warehousing services fell 1.4%, and the core index for final demand for services less trade, transportation, and warehousing services was 0.1% higher….

Among trade services, seasonally adjusted margins for fuels and lubricants retailers rose 12.2%, margins for TV, video, and photographic equipment and supplies retailers rose 7.2%, margins for computer hardware, software, and supplies retailers rose 3.2%, margins for automobile retailers rose 2.7%, margins for sporting goods and boat retailers rose 3.0%, and margins for major household appliances retailers rose 3.4%, but margins for machinery and vehicle wholesalers fell 4.5%, and margins for professional and commercial equipment wholesalers were 7.0% lower….among transportation and warehousing services, average margins for airline passenger services fell 4.3% and margins for truck transportation of freight were 0.6% lower….among the components of the core final demand for services index, the price index for cable and satellite subscriber services rose 0.7%, the price index for credit intermediation, including trust services other than those itemize (partial) rose 0.8%, the price index for arrangement of cruises and tours rose 0.9%, and the price index for dental care rose 0.7%, and the price index for gaming receipts (partial) increased 1.7%…

This report also showed the price index for intermediate processed goods was 1.5% lower in May, after being 0.5% higher in April, 0.5% lower in March, 1.4% higher in February, 0.1% lower in January, 0.4% lower in December, 0.7% lower in November and 1.0% lower in October, but after rising 0.5% in September and by 2.0% in August….the price index for intermediate energy goods fell 8.0% in May as refinery prices for gasoline fell 7.1%, refinery prices for diesel fuel fell 24.5%, the price index for industrial natural gas fell 5.3%, the price index for commercial natural gas fell 3.8%, and the price index for liquefied petroleum gas fell 2.7%… on the other hand, the price index for intermediate processed foods and feeds rose 0.3%, as the producer price index for processed poultry rose 2.1%, the producer price index for dairy products rose 1.7%, and the producer price index for processed fruits and vegetables rose 0.5%….at the same time, the core price index for intermediate processed goods less food and energy goods was 0.1% higher, as the producer price index for primary nonferrous metals rose 6.3%, the producer price index for secondary nonferrous metals rose 4.5%, the producer price index for copper and brass mill shapes rose 4.5%, the producer price index for aluminum mill shapes rose 4.4% the producer price index for synthetic rubber rose 2.0%, and the producer price index for asphalt felts and coatings rose 2.3%….average prices for intermediate processed goods are still 0.7% lower than in May 2023, the fifteenth consecutive year over year decrease, and are thus way down from their 26.6% year over year increase of November 2021, which had been a 46 year high…

Meanwhile, the price index for intermediate unprocessed goods fell 1.8% in May, after rising 3.2% in April. falling 1.9% in March and 0.4% in February, after rising 1.4% in January, falling 4.1% in December, falling 2.1% in November and by 1.6% in October, after rising 2.9% in September, 2.1% in August and 2.5% last July….that was as the April price index for crude energy goods fell 6.6%, as crude oil prices fell 8.7%, while unprocessed natural gas prices rose 1.7% and coal prices were 0.5% higher…however, the price index for unprocessed foodstuffs and feedstuffs was 1.0% higher, on a 28.1% increase in producer prices for hay and hayseeds, an 8.1% increase in producer prices for slaughter turkeys, a 5.5% increase in producer prices for slaughter steers and heifers, an 18.3% increase in producer prices for wheat, and a 6.7% increase in producer prices for corn….meanwhile, the index for core raw materials other than food and energy materials was 1.8% higher on an 18.0% increase in the price index for aluminum base scrap, a 9.8% increase in the price index for copper base scrap, a 2.3% increase in the price index for nonferrous metal ores, and a 1.0% increase in the price index for iron and steel scrap….this raw materials price index is still 1.6% lower than a year ago, the sixteenth consecutive negative annual print, after twenty-seven consecutive year over year increases, which came after the annual change on this index had been negative from the beginning of 2019 through October of 2020…

Lastly, the price index for services for intermediate demand was 0.1% higher in May, after being 0.3% higher in April, 0.2% higher in March, unchanged in February, 0.9% higher in January, 0.5% higher in December, and 0.5% higher in November….the price index for intermediate trade services was 0.7% higher, as margins for machinery and equipment parts and supplies wholesalers rose 1.6% and margins for intermediate chemicals and allied products wholesalers rose 0.6%, but margins for margins for intermediate metals, minerals, and ores wholesalers fell 1.6%….at the same time, the index for transportation and warehousing services for intermediate demand was 0.3% higher, as the intermediate price index for arrangement of freight and cargo rose 9.3%, the intermediate price index for water transportation of freight rose 0.8%, and the intermediate price index for courier and messenger services, except air mail was 0.7% higher…meanwhile, the core price index for intermediate services other than trade, transportation, and warehousing services was unchanged, as the intermediate price index for investment banking rose 1.6% and the intermediate price index for waste collection rose 2.5%, but the intermediate price index for permanent placement services fell 13.2% and the intermediate price index for portfolio management fell 1.8%…over the 12 months ended in April, the year over year price index for services for intermediate demand is now 3.4% higher than it was a year ago, the forty-fourth consecutive annual increase in this index, after it briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, even as it is still much lower than the record 9.5% year over year increase indicated for July 2021…

April Wholesale Sales Up 0.1%, Wholesale Inventories Up 0.1%

The April report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at “$663.8 billion, up 0.1 percent (±0.4 percent)* from the revised March level and were up 1.4 percent (±0.9 percent) from the revised April 2023 level”… the March preliminary sales estimate was essentially unrevised from the $662.8 billion reported last month, which meant “the February 2024 to March 2024 percent change was unrevised from the preliminary estimate of down 1.3 percent (±0.4 percent)”…as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold….

On the other hand, the monthly change in private inventories is a major factor in GDP, since any goods on the shelf or in intermediate storage represent goods that were produced but not sold, and this April report estimated that wholesale inventories were valued at a seasonally adjusted “$895.8 billion at the end of April, up 0.1 percent (±0.4 percent)* from the revised March level. Total inventories were down 1.7 percent (±0.7 percent) from the revised April 2023 level”, with the March preliminary estimate revised from the $894.7 billion reported a month ago to $894.4 billion at the same time, thus “revised from the advance estimate of up 0.2 percent (±0.4 percent)* to up 0.1 percent (±0.4 percent)*”.….

That $0.3 billion downward revision to March’s wholesale inventories should lower 1st quarter GDP by 0.01 or 0.02 percentage points from what was reported in the 2nd estimate….meanwhile, April wholesale inventories, after an adjustment for price changes for each category of wholesale goods as indicated by the components of the April producer price index, appears to indicate a real wholesale inventory decrease of around 0.5% at the beginning of the 2nd quarter, compared to a 1st quarter’s real wholesale inventory change that was modestly negative, as indicated by the key source data and assumptions (xls) for the second estimate of 1st quarter GDP….if that small April real inventory decrease holds through May & June, the change in 2nd quarter real wholesale inventories would be negligible and have little impact on the growth rate of 2nd quarter GDP…

 

 

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)