Major monthly reports released this past week included the March Consumer Price Index, the March Producer Price Index, and the March Import-Export Price Index, all from the Bureau of Labor Statistics, and the February report on Wholesale Trade, Sales and Inventories from the Census Bureau….meanwhile, a report released by the Fed late Friday of last week that we neglected to note then was the Consumer Credit Report for February, which indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $14.1 billion, or at a 3.4% annual rate, as non-revolving credit expanded at a 0.9% annual rate to $3,712.4 billion and revolving credit outstanding grew at a 10.7% rate to $1,338.7 billion…
CPI Rose 0.4% in March on Higher Rent, Energy, and Insurance
The consumer price index was 0.4% higher in March, as higher prices for rent, gasoline, utilities, car insurance, medical care services including health insurance, transportation services, clothing, and internet services were just partly offset by lower prices for new & used vehicles, appliances, telephone hardware including smartphones, and recreational goods…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 0.4% higher in March, after being 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, by 0.1% in May, by 0.4% in April, and by 0.1% in March 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 310.326 in February to 312.332 in March, which left it statistically 3.47738% higher than the index reading of 301.836 in March of last year, which is reported as a 3.5% year over year increase, up from the 3.2% year over year increase reported for February, with such widely cited year over year figures often telling us more about last year’s CPI changes than this years…with higher energy prices partly offset by flat prices for food, seasonally adjusted core prices, which exclude food and energy, were also up by 0.4% for the month, as the unadjusted core price index rose from 315.419 to 317.088, which left the core index 3.80128% ahead of its year ago reading of 305.476, which is reported as a 3.8% year over year increase, the same year over year core price increase that was reported in February, but 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 rose 1.1% in March, after rising 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 being unchanged in July, and is now 2.1% higher than in March of a year ago….the price index for energy commodities was 1.5% higher in March, while the price index for energy services was 0.7% higher, after it had risen by 0.8% in February….the energy commodity index was up 1.5% on a 1.7% increase in the price of gasoline and despite a 1.3% decrease in the price of fuel oil, as prices for other energy commodities, including propane, kerosene, and firewood, were on average 1.3% lower…within energy services, the price index for utility gas service was unchanged in March after rising 2.3% in February, but is still 3.2% lower than it was a year ago, while the electricity price index rose 0.9% in March after rising 0.8% in February… energy commodities are now averaging 0.9% higher than their year ago levels, with gasoline prices averaging 1.3% higher than they were a year ago, while the energy services price index is now up 3.1% from last March, as electricity prices are averaging 5.0% higher than a year ago…
Meanwhile, the seasonally adjusted food price index was 0.1% higher in March, after being unchanged in February, being 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, as the price index for food purchased for use at home was unchanged, after being unchanged in February, after being 0.4% higher in January, 0.1% higher in December, unchanged in November, and 0.3% higher in October, while the price index for food bought to eat away from home was 0.3% higher, as average prices at fast food outlets rose 0.3%, average prices at full service restaurants rose 0.2%, and prices of other food away from home averaged 0.6% higher…
In the food at home categories, the price index for cereals and bakery products was 0.9% lower, as bread prices fell 0.9%, the price index for breakfast cereal fell 1.6%, the price index for cakes, cupcakes, and cookies fell 1.0%, the price index for frozen and refrigerated bakery products, pies, tarts, turnovers fell 1.8% and the price index for rice, pasta, and cornmeal was 0.6% lower…on the other hand, the price index for the meats, poultry, fish, and eggs food group was 0.9% higher, as the price index for pork rose 1.1%, the price index for poultry rose 1.5%, and egg prices were 4.6% higher….however, the seasonally adjusted price index for dairy products was 0.1% lower, even as average milk prices rose 0.1%, as the price index for cheese and related products fell 0.3% and the price index for ice cream and related products was 0.5% lower….meanwhile, the fruits and vegetables price index was 0.1% higher, as the price index for fresh fruits rose 0.3% and canned fruit and vegetables prices averaged 0.6% higher….in addition, the beverages price index was 0.3% higher, as the price index for carbonated drinks rose 0.3%, the price index for noncarbonated juices and drinks was 0.6% higher, and the price index for coffee was 0.3% higher….lastly, the price index for the ‘other foods at home’ category was 0.5% lower, as the price index for sugar and sweets fell 0.8%, the price index for salad dressing fell 1.2%, the price index for peanut butter fell 2.4%, the price index for butter and margarine fell 2.7%, the price index for soups fell 0.9%, and the price index for salt and other seasonings and spices was 2.2% lower…
Among the seasonally adjusted core components of the CPI, which rose by 0.4% in March , after rising 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% in July, the composite price index of all goods less food and energy goods was 0.2% lower in March, while the more heavily weighted composite for all services less energy services was 0.5% higher….
Among the goods components of the core price index, which will be used by the Bureau of Economic Analysis to adjust October’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.1% lower, as the price index for floor coverings fell 0.9%, the price index for laundry equipment fell 1.2%, and the minor appliance index was 1.9% lower….on the other hand, the apparel price index was 0.7% higher on a 2.6% increase in the price index for women’s outerwear, a 2.4% increase in the price index for women’s dresses, a 5.9% increase in the price index for girls’ apparel, and a 1.1% increase in the price index for men’s footwear…. however, the price index for transportation commodities other than fuel was was 0.5% lower, as average prices for new vehicles was 0.2% lower, the price index for used cars and trucks was 1.1 lower, and the price index for vehicle parts and equipment other than tires was also 1.1% lower….meanwhile, the price index for medical care commodities was 0.2% higher as prescription drug prices rose 0.3%, nonprescription drug prices fell 1.1%, and the price index for medical equipment and supplies was 0.6% higher…on the other hand, the recreational commodities index was 0.5% lower, as the price index for televisions fell 1.1%, the price index for toys fell 1.7%, the price index for audio equipment fell 2.4%, the price index for sporting goods including bicycles fell 1.6%, and the price index for newspapers and magazines was 1.0% lower… in addition, the education and communication commodities index was 1.2% lower on a 0.9% decrease in the price index for educational books and supplies, and a 1.8% decrease in the price index for telephone hardware, calculators, and other consumer information items.…lastly, a separate price index just for alcoholic beverages was 0.1% higher, while the price index for ‘other goods’ was 0.2% higher on a 0.2% increase in the price index for cosmetics, perfume, bath, nail preparations and implements and a 0.7% increase in the price index for cigarettes…
Within core services, the price index for shelter was 0.4% higher, as rents rose 0.5%, homeowner’s equivalent rent was 0.4% higher, prices for lodging away from home at hotels and motels were 0.1% higher, the price index for water, sewers and trash collection was 0.3% higher, and household operation costs were 0.8% higher on a 0.9% increase in prices for domestic services….at the same time, the price index for medical care services was 0.6% higher, as the price index for care of invalids and elderly at home rose 5.9%, the price index for outpatient hospital services rose 1.3%, and the price index for health insurance was 1.2% higher….moreover, the transportation services price index was 1.5% higher, as the price index for motor vehicle maintenance and repair rose 1.7%, the price index for parking fees and tolls rose 1.3%, and the price index for motor vehicle insurance rose was 2.8% higher…in addition, the recreation services price index was 0.1% higher, as the price index for veterinarian services rose 2.5%, and the price index for video discs and other media was 14.7% higher…at the same time, the price index for education and communication services was 0.2% higher, as the price index for postage and delivery services rose 0.4%, the price index for elementary and high school tuition and fees rose 0.3, and the price index for internet services and electronic information providers was 0.8% higher…lastly, the index for other personal services rose 0.8%, as the price index for funeral expenses rose 1.7%, and the price index for checking account and other bank services was 1.4% higher..
NB: a note on reporting 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 say 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 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%…
Producer Prices Rose 0.2% in March on Higher Foods & Transportation Services
The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.2% in March, as the price index for finished wholesale goods fell 0.1% while the price index for final demand for services was 0.3% higher…that March increase followed a 0.6% PPI increase in February, when the price index for wholesale goods rose 1.2% and the price index for final demand for services was 0.3% higher, a 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 0.2% lower and the price index for final demand for services was 0.1% lower; a 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 2.1% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was up 0.2% for the month, and is still 2.8% higher than it was a year ago…
As noted, the producer price index for final demand for goods was 0.1% lower in March, after being 1.2% 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 in July, and is now up 0.8% from a year ago….the final demand goods price index was down 0.1% in January as the price index for wholesale energy goods was 1.6% lower, after it had risen 4.1% in February, after falling 1.1% in January, by 0.8% in December, ny 2.0% in November, and falling by 6.4% in October, while the price index for wholesale foods was 1.0% higher, after rising 1.1% 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 0.1% higher, after being 0.3% higher in February…
Wholesale energy prices were down 1.6% in February on a 3.6% decrease in wholesale prices for gasoline, a 6.6% decrease in wholesale prices for diesel fuel, and a 1.2% decrease in wholesale prices for residential natural gas, while the final demand for food price index was 0.8% higher on a 14.1% increase in the wholesale price index for processed young chickens, a 15.3% increase in the wholesale price index for fresh and dry vegetables, a 1.9% increase in the wholesale price index for finfish and shellfish, and a 2.5% increase in the wholesale price index for grains….among core wholesale goods, the wholesale price index for home electronic equipment rose 1.9%, the wholesale price index for sporting and athletic goods increased 2.0%, the wholesale price index for communication and related equipment rose 1.0%, and wholesale price index for metal cutting machine tools was 0.9% higher…
Meanwhile, the price index for final demand for services was 0.3% higher in February, after being 0.3% higher in February, 0.5% higher in January, after being unchanged 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 in July, and is now 2.8% higher than a year ago…the price index for final demand for trade services r0se 0.3%, the price index for final demand for transportation and warehousing services rose 0.8%, and the core index for final demand for services less trade, transportation, and warehousing services was 0.2% higher….
Among trade services, seasonally adjusted margins for computer hardware, software, and supplies retailers rose 12.5%, margins for fuels and lubricants retailers rose 2.5%, margins for apparel retailers rose 1.9%, and margins for professional and commercial equipment wholesalers rose 8.3%, but margins for automobile retailers fell 5.8% and margins for TV, video, and photographic equipment and supplies retailers were 6.7% lower….among transportation and warehousing services, average margins for airline passenger services rose 2.2% and margins for truck transportation of freight rose 0.4%….among the components of the core final demand for services index, the price index for deposit services (partial) rose 2.7%, the price index for securities brokerage, dealing, investment advice, and related services rose 3.1%, the price index for passenger car rental rose 4.2%, and the price index for gaming receipts (partial) increased 2.5%…
This report also showed the price index for intermediate processed goods was 0.5% lower in March, after being 1.5% 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 1.5% in March as refinery prices for gasoline fell 3.6%, refinery prices for jet fuel fell 6.0%, the price index for industrial electric power fell 1.4%, the price index for commercial electric power fell 1.4%, and the price index for natural gas to electric utilities fell 6.4%… on the other hand, the price index for intermediate processed foods and feeds rose 0.6%, as the producer price index for processed poultry rose 10.7%, the producer price index for meats rose 0.8%, the producer price index for refined sugar and byproducts rose 0.8%, and the producer price index for dairy products rose 0.9%….however, the core price index for intermediate processed goods less food and energy goods was 0.4% lower, as the producer price index for plastic resins and materials fell 1.9%, the producer price index for steel mill products fell 7.8%, and the producer price index for air conditioning and refrigeration equipment fell 1.0%, while the producer price index for heating equipment rose 1.8%….average prices for intermediate processed goods are still 1.7% lower than in March 2023, the thirteenth 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 1.9% in March, after falling 0.7% in February, 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% in July….that was as the March price index for crude energy goods fell 6.9%, as crude oil prices fell 0.8%, unprocessed natural gas prices fell 37.0%, and coal prices were 1.9% lower…however, the price index for unprocessed foodstuffs and feedstuffs was 2.2% higher, on a 4.6% increase in producer prices for slaughter hogs, a 7.7% increase in producer prices for slaughter cattle, a 4.1% increase in producer prices for raw milk, and an 4.1% increase in producer prices for corn…meanwhile, the index for core raw materials other than food and energy materials was 0.2% higher on a 8.2% increase in the price index for nonferrous metal ores, a 5.0% increase in the price index for copper base scrap, and a 5.0% increase in the price index for recyclable paper….this raw materials price index is still 7.1% lower than a year ago, the fourteenth negative 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 0.2% higher in March, after being unchanged in February, 0.7% higher in January, 0.4% higher in December, and 0.5% higher in November, but after being unchanged in October, 0.3% higher in September, 0.1% lower in August, and 0.7% higher in July….the price index for intermediate trade services was unchanged, as margins for intermediate metals, minerals, and ores wholesalers rose 2.8% and margins for intermediate chemicals and allied products wholesalers rose 0.8%, but margins for machinery and equipment parts and supplies wholesalers fell 1.2% and margins for intermediate hardware, building material, and supplies retailers fell 1.4%….at the same time, the index for transportation and warehousing services for intermediate demand was also unchanged, as the intermediate price index for arrangement of freight and cargo fell 5.1%, but the intermediate price index for transportation of passengers rose 2.2%, and the intermediate price index for water transportation of freight was 1.1% higher…meanwhile, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.3% higher, as the intermediate price index for securities brokerage, dealing, investment advice, and related services rose 3.1%,, the intermediate price index for investment banking rose 7.6%, the intermediate price index for deposit services (partial) rose 2.77%, and the intermediate price index for passenger car rental rose 4.5%…over the 12 months ended in March, the year over year price index for services for intermediate demand is now 3.6% higher than it was a year ago, the forty-second 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…
February Wholesale Sales Up 2.3%, Wholesale Inventories Up 0.5%
The February report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at “$673.7 billion, up 2.3 percent (±0.4 percent) from the revised January level and .. up 0.8 percent (±1.1 percent)* from the revised February 2023 level”… the December 2023 to January 2024 percent change in sales was revised from the preliminary estimate of down 1.7 percent (±0.4 percent) to $663.9 billion a decrease of 1.8 percent (±0.5 percent) in conjunction with an annual revision of previously published data based on the results of the 2022 Annual Wholesale Trade Survey, and then was further revised to a decrease of 1.4% with this report….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 sold….
On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods in a warehouse or on a store shelf represent goods that were produced but not sold, and this February report estimated that wholesale inventories were valued at $901.1 billion at month end, an increase of 0.5 percent (+/-0.4%) from the revised January level but 1.5 percent t (±0.9 percent) lower than February a year ago, with the January preliminary inventory estimate revised from the advance estimate of down 0.3 percent (±0.2 percent) to $895.1 billion to a decrease of 0.2 percent (±0.2 percent) to $896.5 billion, also reflecting both the annual revision and revisions included in this report….
For national accounts, the wholesale inventories reported here will be adjusted the February producer price indices…with notable exceptions such as inventories of farm products, chemicals and petroleum, we’ve previously estimated that wholesale inventories appear to be roughly 70% finished goods….with the February producer price index for finished goods up by 1.2% while the producer price indexes for intermediate goods & raw goods were 1.5% higher and 0.7% higher respectively, we can thus figure that February’s real wholesale inventories would have probably decreased by about 0.5%…since real wholesale inventories were up modestly the 4th quarter, February’s wholesale inventories real decrease will reverse that 4th quarter increase and also subtract both January’s and February’s real decreases from 1st 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…)
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