By Perc Pineda, PhD, PLASTICS Chief Economist
The February headline inflation—measured by the change in the Consumer Price Index (CPI) for all items—rose marginally by 0.2 percent, according to the Bureau of Labor Statistics. Fuel oil and gasoline increased the most at 2.6 percent and 1.5 percent, respectively, in February. Food and shelter price indices also increased in February. From a year ago, headline inflation was 1.5 percent higher before seasonal adjustment.
Core inflation, which excludes the volatile food and energy prices, was up 0.1 percent. Since November last year to January this year, core inflation stayed at 2.2 percent year over year. In February it was virtually unchanged at 2.1 percent.
Like the consumer price index movement, the Producer Price Index (PPI) for final demand, which measure prices of goods and services sold for personal consumption, capital investment, government purchases and exports rose 0.1 percent in February, following a 0.1 percent decline in January. The PPI for final demand of goods edged up 0.4 percent and the final demand for services was unchanged in February from January. Year over year, PPI for final demand was up 1.9 percent. Excluding the volatile food, energy, and trade prices, PPI rose 2.3 percent from February last year.
The industry PPI for plastics, however, varies on monthly and annual basis (see time series data posted here https://www.plasticsindustry.org/data-analysis-reports/).
Of the eight price indices for plastics, the index for thermosetting resins manufacturing increased the most in February—by 3.4 percent from January and 3.9 percent from a year ago. The rest of the indices changed marginally with coextruded single-web film and recyclable plastics unchanged in February from the preceding month. Excluding the aforementioned index for thermosetting resins manufacturing and the index for plastics products—which increased 1.9 percent—the rest of the plastics price indices fell compared to last year, with thermoplastics resins decreasing the most by 2.8 percent. The price index for recyclable plastics was 2.6 percent lower than February 2018. The three-month change in natural gas prices as of March 13, 2019 was down 32.7 percent, and 5.6 percent lower from a year ago. It is expected that virgin plastics materials will continue to have a leg up over recycled plastics material.
|Plastics Producer Price Indices by Industry: PlasticsFebruary 2019||Monthly Change||Year over Year Change|
|Plastics Material and Resins Manufacturing||-0.3%||-0.9%|
|Plastics Material and Resins Manufacturing: Thermosetting Resins and Plastics Materials||3.4%||3.9%|
|Plastics Packaging Film and Sheet Manufacturing: Coextruded Single-Web Film, for Flexible Packaging Uses||0.0%||-1.8%|
|Plastics Product Manufacturing||-0.6%||1.9%|
|Plastics Bag and Pouch Manufacturing||0.1%||-0.6%|
|Plastics Bag and Pouch Manufacturing: Polyethylene Refuse Bags||-0.6%||-0.8%|
|Plastics Material and Resins Manufacturing: Thermoplastic Resins and Plastics Materials||-0.9%||-2.8%|
|Material Recyclers: Recyclable Plastics||0.0%||-2.6%|
In sum, the first two months of 2019 showed softer U.S. inflation. By and large, the monthly dips and rises in plastics price indices vary by materials and products, and only swing within a narrow band. The underlying trend of prices in the U.S. remains stable, and supportive of a growing economy. Considering moderate economic growth projections this year in the U.S., the absence of supply and demand shocks that could cause prices to change dramatically would be important to maintaining engagement in both the household and business sectors.