With inflation in the United States still running below the Federal Reserve’s target lately, it’s been difficult enough for tariff fear-mongers to claim that President Trump’s levies on metals and on many Chinese-made goods are setting prices throughout the economy – or even in directly affected sectors – on fire. Yesterday, with a new month’s worth of consumer price data from the Bureau of Labor Statistics, it’s become practically hopeless.
In fact, the big takeaway is that these March data closely resemble February’s. The only significant evidence of steel and aluminum tariffs-led inflation is found in canned fruits and vegetables – where it’s far from airtight – and in large household appliances, which include large laundry machines which have faced their own additional set of tariffs since early 2018. When it comes to products impacted notably by the China tariffs, the price changes are once more all over the board – which strongly indicates that the tariffs themselves haven’t been in the inflation driver’s seat.
As usual, the first table in these monthly consumer inflation analyses presents the price changes for metals-using products. They deserve pride of place for now because they’ve been in effect for more than a year, and because it’s easy to identify metals-using products.
Before zeroing in on the canned stuff, it’s worth mentioning that I found one more data point yesterday morning – inflation numbers for laundry equipment specifically. Some of these products could be the machines used by commercial cleaning operations as opposed to households, but they do sharpen the picture some. In addition, keep in mind that, since so many of the products affected by the metals and China tariffs are food products, the “core inflation” control group figures I’m using measure price changes minus energy – as opposed to the most widely use core data, which strip out both food and energy.
But back to the steel- and aluminum-related figures: Here they are for the February-March, 2019 period (the latest monthly numbers), and for last April to the present (the stretch during which the metals tariffs have been in place), as well as the year-on-year numbers for last April and this March (which provide some indication of trends over time). As usual, the results for tariffs-affected products (e.g., canned foods) are presented along with those of control goods (e.g., non-canned foods) to glean further insights into the tariffs’ effects.
Feb.-March Since April y/y April y/y March
core inflation: +0.17 percent +1.93 percent +2.01 percent +2.05 percent
fresh fruits +1.56 percent +3.55 percent -0.43 percent +4.25 percent
fresh fruits: +1.21 percent +0.65 percent +1.38 percent +1.37 percent
fresh vegetables: +1.97 percent +6.98 percent -2.50 percent +7.66 percent
processed fruits +1.57 percent +1.68 percent -0.44 percent +2.72 percent
canned fruits +1.74 percent +5.20 percent -0.14 percent +6.01 percent
canned fruits: +3.02 percent +4.99 percent -1.60 percent +8.60 percent
canned vegs: +1.26 percent +4.63 percent +1.00 percent +5.04 percent
soups: -1.33 percent -0.16 percent -0.38 percent +0.54 percent
malt beverages -0.62 percent +1.77 percent +0.84 percent +1.84 percent
alcoholic +0.20 percent +1.34 percent +2.17 percent +1.46 percent
non-frozen, non- -0.15 percent +3.30 percent -0.52 percent +3.03 percent
carbonated drinks: +0.69 percent +5.44 percent +0.04 percent +5.44 percent
juices & non- +0.02 percent +4.17 percent -0.26 percent +4.01 percent
new cars/trucks: +0.46 percent +1.13 percent -1.61 percent +0.74 percent
motor vehicle +0.25 percent +2.08 percent -0.74 percent +1.79 percent
appliances: -0.76 percent +2.80 percent +0.27 percent +4.83 percent
major appliances: -2.02 percent +4.59 percent +1.55 percent +8.80 percent
laundry -1.02 percent +0.65 percent +10.00 percent +2.80 percent
non-electric -0.76 percent -0.59 percent -1.45 percent -1.56 percent
cookware & tableware:
tools, hardware, -0.63 percent +0.86 percent +0.19 percent +1.22 percent
The various fruits and vegetables results make a reasonable case that companies in those sectors have been able to pass along some hefty price increases for canned products to consumers. Specifically, except for the April year-on-year changes, all of the figures for canned fruits and canned vegetables show considerably faster price increases than for fresh fruits and vegetables, and even for their processed counterparts (some of which go into frozen or jarred, not canned, products).
It’s true that fresh produce prices as a whole have generally been rising much faster than core prices. But in their canned form, their prices take another big jump up – strongly indicating that something about the canning matters greatly. Moreover, even though the inflation rate in fresh vegetables is leaving in the dust that for fresh fruits, the canning effect is very apparent for fruits as well, especially over time.
It’s also true that the canning effect is much less pronounced for other food groups – like soups and beverages. But here the data is less definitive, largely because these inflation figures also include products sold in forms other than metal cans. And as observed in previous posts, the markets for these products tend to differ significantly as well – which inevitably impacts pricing power.
Yet this March, a generalized “metals-effect” argument once more falls apart upon examining the price trends in non-food products, whether for motor vehicles and their parts; household cookware and tableware; and tools, hardware, and outdoor equipment. Obviously other developments, and perhaps many other developments are playing bigger roles.
The glaring exception is in those double-tariffed laundry machines. Even here, however, that new laundry equipment category I just found reveals major year-on-year price deceleration between last April (ten percent) and this March (2.80 percent). And the March monthly prices were weak across the board in appliances.
The China tariffs continue to present an even more complicated picture for at least three reasons. First, for the following consumer products, last October was the first full month they were in effect. Second, the goods on the U.S. Trade Representative’s list for those levies are categorized using the different classification system than that used by the Bureau of Labor Statistics to gauge prices. As a result, the match-ups are far from exact. And third, the China-specific price effects for different products can be differ dramatically – according to the scale of the Chinese presence in a particular product market.
Nonetheless, here’s the China data for February-March, since last October, and for October and March year-on-year.
Feb.-March Since Oct. Oct. y/y March y/y
core inflation: +0.17 percent +0.99 percent +2.02 percent +2.05 percent
food: +0.28 percent +1.45 percent +1.21 percent +2.12 percent
frozen/freeze- +1.18 percent -0.72 percent -0.46 percent -0.59 percent
dried prepared foods:
fish/seafood: -1.04 percent +0.79 percent +2.82 percent +2.70 percent
processed fish/ -0.51 percent +0.40 percent +1.46 percent +2.76 percent
frozen fish/seafood: -0.46 percent +0.78 percent -0.15 percent +3.29 percent
fruits/vegs: +1.57 percent +3.43 percent -0.32 percent +3.91 percent
fresh fruits/ +1.56 percent +3.71 percent -0.38 percent +4.25 percent
fresh fruits: +1.21 percent +2.51 percent -1.40 percent +1.37 percent
fresh vegs: +1.97 percent +5.07 percent +0.81 percent +7.66 percent
processed +1.57 percent +2.37 percent -0.06 percent +2.72 percent
frozen fruits/vegs: +0.76 percent +0.25 percent -2.72 percent -1.26 percent
non-carbonated/ -0.15 percent +1.91 percent +1.23 percent +3.03 percent
personal care -0.27 percent +0.64 percent +1.52 percent +1.25 percent
household -0.04 percent +0.74 percent +0.69 percent +1.46 percent
recreation goods: -0.74 percent -1.55 percent -3.51 percent -7.28 percent
men’s sportswear: -1.04 percent -2.54 percent +1.47 percent +1.98 percent
women’s +2.90 percent +0.35 percent -5.08 percent -1.55 percent
computers, +0.54 percent -1.17 percent -4.09 percent -3.30 percent
window/floor +0.44 percent -1.96 percent +0.74 percent -1.83 percent
furniture & +0.17 percent +1.38 percent +1.26 percent +3.27 percent
appliances: -0.76 percent -0.58 percent +4.82 percent +4.83 percent
major appliances: -2.02 percent -0.34 percent +8.08 percent +8.80 percent
laundry equipmt: -1.02 percent -5.05 percent +10.00 percent +8.76 percent
misc appliances: -0.29 percent -1.33 percent +3.25 percent +2.56 percent
non-electric -0.76 percent -0.49 percent -0.51 percent -1.56 percent
tools/hardware -0.63 percent +1.27 percent +0.39 percent +1.22 percent
& outdoor equipment:
household +0.83 percent +1.24 percent +1.79 percent +3.33 percent
televisions: -4.20 percent -10.91 percent -17.95 percent -19.28 percent
misc video equip: -0.03 percent +4.41 percent -3.87 percent +1.79 percent
pets & pet +0.26 percent +1.76 percent +0.91 percent +2.81 percent
sporting goods: +1.00 percent +3.04 percent +1.71 percent +0.25 percent
photo equipment -0.05 percent -1.29 percent -4.94 percent -5.70 percent
sewing machines/ +2.51 percent +12.51 percent -2.08 percent +10.32 percent
motor vehicle +0.25 percent +1.27 percent +1.25 percent +1.79 percent
tires: +0.15 percent +2.28 percent +0.03 percent +1.08 percent
stationery/ +0.28 percent +4.53 percent -6.48 percent -0.01 percent
Even in sectors with a prominent Chinese presence, like apparel of consumer electronics, any kind of price-hiking tariff effect is elusive, at very best. In fact, in virtually all the products below, inflation has been decidedly weaker than in the core control group, and deflation is apparent in many.
Comparing the two year-on-year figures does reveal some accelerating inflation (or weakening deflation). This is especially clear in the food-related categories (including the broad food control group) and in some non-food segments (like household furnishings, men’s and women’s sportswear, computers and peripherals, furniture and bedding, stationery, sewing machines and fabrics). But softening prices can be seen in recreational goods, sporting goods, personal care products, window and floor coverings, televisions, miscellaneous appliances, and several others.
Since these tariffs-related price data began coming in, I’ve been saying that although inflationary effects haven’t yet shown up, they could always appear in the coming months. Roughly a year after the metals tariffs have been in place, it’s now time to start suggesting that the no tariff-led inflation situation is becoming the New Norm.