Workers buying supplies and people running small businesses need more than a headline about rising prices. In the January figures released by the Bureau of Labor Statistics on February 10, imported fuel prices rose 5.8 percent while nonfuel import prices fell 0.2 percent. Those monthly, unadjusted movements point in opposite directions; they cannot describe one uniform change across a purchaser’s needs. [ximpim_02102017]
Even the fuel category deserves a closer look. Imported petroleum prices rose 5.2 percent and natural gas prices increased 12.2 percent in January, before seasonal adjustment. For a reader trying to understand exposure, a useful first step is to mark which purchases actually depend on which fuel. The rates describe import-price categories, not increases already measured on that reader’s invoices. [ximpim_02102017]
Domestic figures identify another part of the picture. The February 14 release put January final-demand goods inflation at 1.0 percent, seasonally adjusted, accounting for over 60 percent of the overall producer-price rise. Services rose 0.3 percent; changes in wholesale and retail trade margins accounted for over 80 percent of that services increase. A distribution margin is neither a full retail selling price nor profit after operating expenses. [ppi_02142017]
Our practical reading is to sort a purchase list into fuel-linked items, other imported goods and domestic purchases, leaving unknown exposure visible. Keep a separate question beside distribution charges: what is being measured? Such a list helps small purchasers ask for relevant explanations rather than assume every increase has the same cause. Actual bills remain necessary to establish who carried a higher cost. [ppi_02142017][ximpim_02102017]
Source documents
- Producer Price Indexes – January 2017https://www.bls.gov/news.release/archives/ppi_02142017.htm
- U.S. Import and Export Price Indexes – January 2017https://www.bls.gov/news.release/archives/ximpim_02102017.htm