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

Major reports released last 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, and the Wholesale Trade, Sales and Inventories report for April from the Census Bureau….in addition, late on Friday of the prior week the Fed released the Consumer Credit Report for April, which showed that overall consumer credit, a measure of non-real estate personal debt, expanded by a seasonally adjusted $18.9 billion, or at a 4.3% annual rate, as non-revolving credit expanded at a 3.3% rate to $3,689.1 billion while revolving credit outstanding grew at a 7.0% rate to $1,321.4 billion…

Consumer Prices Rose 0.1% in May on Higher Prices for Food, Shelter, Utilities, Medical Care, and Electricity

The consumer price index was 0.1% higher in May, as higher prices for rent, groceries, eating out, electricity, prescription drugs, appliances, recreational goods, household and vehicle insurance, and vehicle parts and equipment were partly offset by lower prices for fuel, new and used vehicles, furniture, airline fares, smartphones, and admissions to sporting events….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that their weighted average of seasonally adjusted prices for consumer goods and services was 0.1% higher in May, after being 0.2% higher in April, 0.1% lower in March, 0.2% higher in February, 0.5% higher in January, 0.4% higher in December, 0.3% higher in November, 0.2% higher in October, 0.2% higher in September. 0.2% higher in August, 0.2% higher last July, unchanged last June, and unchanged 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 320.795 in April to 321.465 in May, which left it statistically 2.354897% higher than the index reading of 314.069 from May of last year, which is reported as a 2.4% year over year increase, more than the 2.3% year over year increase that was reported for May, with that widely cited year over year change reflecting the effect of last April’s 0.0% increase dropping out of the comparison and being replaced by the current month’s +0.1%, and not telling us anything beyond that….with mostly lower energy prices offset by higher food prices, seasonally adjusted core prices, which exclude both food and energy, were also up by 0.1% for the month, as the unadjusted core price index rose from 326.815 to 327.509, which left the core index 2.78694% ahead of its year ago reading of 318.629, which is reported as a 2.8% year over year increase, same as the 2.8% year over year core price increase that was reported for 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 was 1.0% lower in May, after being 0.7% higher in April, 2.4% lower in March, 0.2% higher in February, 1.1% higher in January, 2.4% higher in December, 0.1% higher in November, 0.2% lower in October, 1.0% lower in September, 1.0% lower in August, and 0.4% lower last July, and is now 3.5% lower than in May of a year ago…the price index for energy commodities was 2.4% lower in May, while the price index for energy services was 0.4% higher, after the energy services price index had risen by 1.5% in April….the energy commodities index was down 2.4% on a 2.6% decrease in the price index for gasoline, tempered by a 0.4% increase in the price index for fuel oil, while prices for “other energy commodities”, including propane, kerosene, and firewood, averaged 4.1% higher…within energy services, the price index for utility gas service was 1.0% lower in May, after being 3.6% higher in April, and is still 15.3% higher than it was a year ago, while the electricity price index was 0.9% higher in May, after being 0.8% higher in April…. energy commodities are now averaging 11.6% below their year ago levels, with gasoline prices averaging 12.0% lower than they were a year ago, while the energy services price index is now up 6.8% from last May, as electricity prices are now averaging 4.5% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was 0.3% higher in May, after being 0.1% lower in April, 0.4% higher in March, 0.2% higher in February, 0.4% higher in January, 0.3% higher in December, 0.3% higher in November, 0.2% higher in October, 0.3% higher in September, 0.2% higher in August, and 0.1% higher last July, as the price index for food purchased for use at home was 0.3% higher in May, after being 0.4% lower in April, 0.5% higher in March, unchanged in February, and 0.5% higher in January, while the price index for food bought to eat away from home was also 0.3% higher, as average prices at fast food outlets rose 0.3% and average prices at full service restaurants also rose 0.3%, while the price index for food at employee sites and schools 0.1% higher, and prices for other food away from home averaged 0.4% higher…

In the food at home categories, the price index for cereals and bakery products was 1.1% higher, even though bread prices fell 0.4%, as the price index for breakfast cereal rose 2.0%, the price index for rice, pasta, and cornmeal rose 1.1%, the price index for fresh sweetrolls, coffeecakes, doughnuts rose 1.5%, and the price index for frozen and refrigerated bakery products, pies, tarts, and turnovers was 1.0% higher.…on the other hand, the price index for the meats, poultry, fish, and eggs food group was 0.4% lower, as the price index for ham fell 1.8%, and egg prices were 2.7% lower….in addition, the seasonally adjusted price index for dairy products was 0.1% lower, as average milk prices fell 1.7% while the price index for cheese and related products was 0.1% higher…. meanwhile, the fruits and vegetables price index was 0.2% higher, as the price index for fresh vegetables rose 0.2%, and the price index for canned fruits and vegetables was 1.9% higher.…on the other hand, the beverages price index was 0.3% lower, as the price index for noncarbonated juices and drinks fell 1.6% even as the price index for coffee was 1.2% higher….lastly, the price index for the ‘other foods at home’ category was 0.7% higher, as the price index for salad dressing rose 0.7%, the price index for peanut butter rose 3.8%, the price index for sugar and sweets rose 0.7%, and the price index for salt and other seasonings and spices was 2.4% higher…

Among the seasonally adjusted core components of the CPI, which rose by 0.1% in May, after rising by 0.2% in April, 0.1% in March, 0.2% in February, by 0.4% in January. by 0.2% in December, by 0.3% in August, September, October and November, 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 index for all services less energy services was 0.2% higher..

Among the goods components of the core price index, which will initially 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 0.3% higher, as the price index for window and floor coverings rose 1.2%, the price index for major appliances rose 4.3%, the price index for tools, hardware and supplies rose 1.2% and the price index for tools, hardware and supplies was 1.1% higher….on the other hand, the apparel price index was 0.4% lower on a 1.8% decrease in the price index for women’s outerwear, a 2.4% decrease in the price index for men’s underwear, nightwear, swimwear, and accessories, a 1.6% decrease in the price index for men’s footwear, and a 1.9% decrease in the price index for infants' and toddlers' apparel….at the same time, the price index for transportation commodities other than fuel was was 0.2% lower, as average prices for new cars fell 0.5% and the price index for used cars and trucks was also 0.5% lower…however, the price index for medical care commodities was 0.6% higher as the price index for prescription drugs rose 0.6% and the price index for medical equipment and supplies was 0.9% higher…in addition, the recreational commodities index was 0.4% higher, as the price index for video equipment other than TVs rose 1.0%, the price index for audio equipment rose 1.6%, the price index for sports vehicles including bicycles rose 0.5%, the price index for toys, games, hobbies and playground equipment rose 2.2%, the price index for photographic equipment and supplies rose 1.6%, and the price index for newspapers and magazines was 5.2% higher… at the same time, the education and communication commodities index was 0.1% higher, on a 1.1% increase in the price index for educational computers, peripherals, and smart home assistants and a 0.4% increase in the price index for college textbooks.…lastly, a separate price index just for alcoholic beverages was 0.1% lower, while the price index for ‘other goods’ was 0.2% higher. on a 0.4% increase in the price index for hair, dental, shaving, and miscellaneous personal care products, and a 0.8% increase in the price index for cigarettes…

Within core services, the price index for shelter was 0.3% higher, as rents rose 0.3% and homeowner’s equivalent rent rose 0.3%, but prices for lodging away from home at hotels and motels were 0.1% lower, while the price index for household insurance was 0.8% higher, and the price index for water, sewers and trash collection services was 0.5% higher, and the price index for moving, storage, and freight expense was 1.2% higher… at the same time, the price index for medical care services was 0.2% higher, as the price index for eyeglasses and eye care rose 0.3%, price index for outpatient hospital services was 0.8% higher, and the price index for nursing homes and adult day services was 1.1% higher….on the other hand, the transportation services price index was 0.2% lower, as the price index for airline fares fell 2.7%, the price index for vehicle maintenance and servicing fell 0.2%, and the price index for parking fees and tolls was 0.4% lower….in addition, the recreation services price index was 0.3% lower, as the price index for purchase, subscription, and rental of videos fell 0.1%, and the price index for admission to sporting events was 8.6% lower…however, the price index for education and communication services was 0.3% higher, as the price index for day care and preschool rose 0.6%, the price index for postage and delivery services rose 0.3%, and the price index for residential telephone services was also 0.3% higher…lastly, the index for other personal services was 0.2% higher, as the price index for laundry and dry cleaning rose 0.5% and the price index for haircuts and other personal care services was also 0.5% higher..

Producer Prices Rose 0.1% in May on Higher Prices for Core Goods and Trade Services

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.1% in May, as the final demand price index for wholesale goods rose 0.2%, while the price index for final demand for services was was 0.1% higher….that 0.1% increase in May’s PPI came after the April PPI was revised from a 0.5% decrease to a 0.2% decrease, now showing the final demand price index for wholesale goods 0.1% higher, and the price index for final demand for services 0.4% lower, and also followed a downwardly revised unchanged PPI in March, when the final demand price index for wholesale goods fell 0.9% while the price index for final demand for services was revised to 0.3% higher, and a downwardly revised 0.1% increase in February, when the price index for wholesale goods rose 0.3% while the price index for final demand for services was 0.1% higher, and an unrevised 0.7% increase in January, when the final demand price index for wholesale goods rose 0.7% and the price index for final demand for services was also 0.7% higher, and also followed a 0.5% PPI increase in December, when the final demand price index for wholesale goods rose 0.5% and the price index for final demand for services was also 0.5% higher, a 0.1% increase in November, when final demand prices for wholesale goods rose 0.6% and the price index for final demand for services was 0.1% lower, an upwardly revised 0.3% PPI increase in October, when the final demand price index for wholesale goods rose 0.1% and the price index for final demand for services was 0.5% higher, an unrevised 0.3% increase in September, when the price index for finished wholesale goods was 0.2% lower, but the price index for final demand for services was 0.5% higher, and an unrevised 0.3% increase in August, when prices for finished wholesale goods averaged unchanged, while the price index for final demand for services was 0.5% higher….on an unadjusted basis, producer prices are now 2.6% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was 0.1% higher for the month, and is 2.7% higher than it was a year ago…

As noted, the producer price index for final demand for goods was 0.2% higher in May, after being 0.1% higher in April, 0.9% lower in March, 0.3% higher in February, 0.7% higher in January, 0.5% higher in December, 0.6% higher in November, 0.1% higher in October, 0.2% lower in September, unchanged in August, 0.4% higher in July, 0.2% lower in June, and 0.6% lower last May, and is still 1.5% higher than a year ago….the final demand goods price index was 0.2% higher in May as the price index for wholesale energy goods was unchanged, after it had been 0.1% higher in April, 3.9% lower in March, 1.4% lower in February, 2.0% higher in January, and 2.2% higher in December, and as the price index for wholesale foods was 0.1% higher, after it had been 0.9% lower in April, 2.1% lower in March, up 1.8% in February, up 1.0% in January, up 0.3% in December, and up 2.1% in November, while the index for final demand for core wholesale goods (excluding food and energy) was 0.2% higher May, after being 0.3% higher April, 0.3% higher March, 0.3% higher February, 0.2% higher in January and 0.1% higher in December….

Wholesale energy prices were unchanged in May as a 1.6% increase in wholesale prices for gasoline and a 3.5% increase in wholesale prices for home heating oil and distillates were offset by a 8.3% decrease in wholesale prices jet fuel and a 1.1% decrease in wholesale prices for natural gas liquids, while the final demand for food price index was 0.1% higher on an 8.0% increase in the wholesale price index for roasted coffee, a 4.0% increase in the wholesale price index for oilseeds, and a 5.1% increase in the wholesale price index for processed young chickens…. among core wholesale goods, the wholesale price index for industrial material handling equipment rose 1.0%, the wholesale price index for electronic computers and computer equipment rose 1.3%, and the wholesale price index for railroad equipment was 1.3% higher…

Meanwhile, the price index for final demand for services was 0.1% higher in May, after being 0.4% lower in April, 0.3% higher in March. 0.1% higher in February, 0.7% higher in January, 0.5% higher in December, 0.1% lower in November, 0.4% higher in October, 0.5% higher in September, 0.5% higher in August, but 0.2% lower last July, and is still 3.2% higher than a year ago…the price index for final demand for trade services rose 0.4%, the price index for final demand for transportation and warehousing services fell 0.2%, and the core index for final demand for services other than trade, transportation, and warehousing services was unchanged….

Among trade services, seasonally adjusted margins for computer hardware, software, and supplies retailers rose 4.4%, margins for automotive parts, including tire retailers were 1.5% higher, margins for hardware, building materials, and supplies retailers were 2.3% higher, and margins for machinery and vehicle wholesalers were 2.9% higher, but margins for furniture retailers were 8.2% lower,….among transportation and warehousing services, average margins for airline passenger services were 1.1% lower and margins for air transportation of freight were also 1.1% lower….among the components of the core final demand for services index, the price index for passenger car rental rose 2.1%, the price index for sales and subscriptions of periodicals and newspapers rose 2.0%, and the price index for traveler accommodation services rose 1.4%, while the price index for securities brokerage, dealing, investment advice, and related services fell 2.0%, and the price index for application software publishing was 2.0% lower…

This report also showed the price index for intermediate processed goods was 0.1% higher in May, after being 0.6% higher in April, 0.1% lower in March, 0.4% higher in February, 1.0% higher in January, 0.2% higher in December, 0.1% higher in November, 0.3% higher in October, but 0.8% lower in September, 0.1% lower in August, and 0.5% higher last July….the price index for intermediate energy goods fell 1.2% in May as refinery prices for jet fuel fell 8.2%, refinery prices for residual fuels fell 10.9%, producer prices for natural gas to electric utilities fell 3.7%, and producer prices for Industrial natural gas fell 3.6% ….on the other hand, the price index for intermediate processed foods and feeds rose 0.5%, as the producer price index for fats and oils rose 3.3%, and the producer price index for processed poultry was 3.7% higher….at the same time, the core price index for intermediate processed goods less food and energy goods was 0.4% higher, as the producer price index for steel mill products rose 7.1%, the producer price index for primary nonferrous metals rose 4.6%, the producer price index for nitrogenates rose 3.9%, the producer price index for phosphates rose 3.0%, the producer price index for metal valves rose 3.3%, and the producer price index for heating equipment was 2.6% higher….average prices for intermediate processed goods were 1.9% higher than in May 2024, the 6th year over year increase in 27 months, and are 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 1.6% in May, after falling 3.7% in April, 3.9% in March, but after rising 0.2% in February, 5.8% in January and 2.9% in December, after being unchanged in November, after rising 2.3% in October, after falling 1.9% in September and falling 3.2% in August….that was as the April price index for crude energy goods fell 3.5, even as crude oil prices rose 1.3%, as unprocessed natural gas prices fell 18.7%, while coal prices were 0.9% higher…however, the price index for unprocessed foodstuffs and feedstuffs was 0.1% higher, on a 4.0% increase in producer prices for oilseeds, a 7.1% increase in producer prices for slaughter cattle, and a 4.4% increase in producer prices for slaughter hogs….meanwhile, the index for core raw materials other than food and energy materials was 1.4% lower, on a 16.2% decrease in the price index for hides and skins and a 7.9% decrease in the price index for iron and steel scrap….this raw materials price index is now 1.0% lower than a year ago, the 21st year over year decrease in the past 28 months, which followed 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 was 0.1% higher in May, after being 0.3% lower in April, 0.4% higher in March, unchanged in February, 0.1% higher in January, 0.6% higher in December, 0.2% lower in November, 0.1% higher in October, 0.2% higher in September, 0.1% higher in August, 0.3% higher in July, and 0.5% higher last June.…the price index for intermediate trade services was 0.7% higher, as margins for metals, minerals, and ores wholesalers rose 4.9%, margins for chemicals and allied products wholesalers rose 0.8%, and margins for paper and plastics products wholesalers rose 0.9%, while margins for food wholesalers were 0.6% lower….on the other hand, the price index for transportation and warehousing services for intermediate demand was 0.1% lower, as the intermediate price index for warehousing, storage, and related services fell 3.0%, the intermediate index for water transportation of freight fell 1.6%, and the intermediate index for air transportation of freight was 1.1% lower….at the same time, the core price index for intermediate services other than trade, transportation, and warehousing services was also 0.1% lower, as the intermediate price index for credit intermediation, including trust services (partial) fell 4.0%, the intermediate price index for business loans (partial) fell 3.7%, and the intermediate price index for securities brokerage, dealing, investment advice, and related services was 2.0% lower….over the 12 months ended in April, price index for services for intermediate demand was 1.9% higher than it was a year ago, the fifty-fifth consecutive annual increase in this index, after it had briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, while the current annual increase is still much lower than the record 9.5% year over year increase that was indicated for July 2021…

April Wholesale Sales Up 0.1%, Wholesale Inventories Up 0.2%

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 “$700.2 billion, up 0.1 percent (±0.5 percent)* from the revised March level and were up 6.0 percent (±0.7 percent) from the revised April 2024 level”… the March preliminary estimate of wholesale sales was revised from the $697.9 billion reported last month to $699.1 billion, which meant “the February 2025 to March 2025 percent change was revised from the preliminary estimate of up 0.6 percent (±0.7 percent)* to up 0.8 percent (±0.7 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 “$908.7 billion at the end of April, up 0.2 percent (±0.4 percent)* from the revised March level. Total inventories were up 2.3 percent (±0.5 percent) from the revised April 2024 level.”, with the March preliminary estimate revised from the $907.5 billion reported a month ago to $907.1 billion at the same time, thus revised revised the change in arch inventories from the 0.4% increase reported a month ago to an increase of 0.3%…

That $0.4 billion downward revision to March’s wholesale inventories should lower 1st quarter GDP by about 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 increase of around 0.5% at the beginning of the 2nd quarter, compared to a 1st quarter’s real wholesale inventory change that was strongly positive, accounting for about 40% of the quarter’s record increase in inventories. as indicated by the key source data and assumptions (xls) for the second estimate of 1st quarter GDP….hence, unless subsequent months of the 2nd quarter see an even larger increase ​in wholesale inventories than we saw in the first quarter, they will subtract from 2nd quarter GDP by an amount equal to the difference between those quarterly inventor​y increases..

 

 

(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 chosen from the aforementioned GGO posts, contact me…)