BLS U S Bureau of Labor Statistics : Producer Price Index

Transmission of material in this release is embargoed until 8:30 a.m. (EST), Tuesday, January 15, 2019

USDL 19-0075

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PRODUCER PRICE INDEXES - DECEMBER 2018

The Producer Price Index for final demand fell 0.2 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.1 percent in November and 0.6 percent in October. (See table A.) On an unadjusted basis, the final demand index moved up 2.5 percent in 2018, the same as in 2017.

In December, 80 percent of the decrease in the final demand index is attributable to a 0.4-percent decline in prices for final demand goods. The index for final demand services edged down 0.1 percent.

The index for final demand less foods, energy, and trade services was unchanged in December following a 0.3-percent rise in November. In 2018, prices for final demand less foods, energy, and trade services advanced 2.8 percent following a 2.3-percent increase in 2017.

Chart 1. One-month percent changes in selected PPI final demand price indexes, seasonally adjusted

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Dec'17 Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec'18

Final demandFinal demand goodsFinal demand services

Chart 2. Twelve-month percent changes in selected PPI final demand price indexes, not seasonally adjusted

Percent change

5.0

4.0

3.0

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1.0

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Dec'17

JanFebMarAprMayJuneJulyAugSepOctNovDec'18

Final demand

Final demand goods

Final demand services

Final Demand

Final demand goods: The index for final demand goods moved down 0.4 percent in December, the same as in November. In December, the decline was the result of a 5.4-percent drop in the index for final demand energy. In contrast, prices for final demand foods advanced 2.6 percent, and the index for final demand goods less foods and energy rose 0.1 percent.

Product detail: Leading the December decrease in the index for final demand goods, gasoline prices dropped 13.1 percent. The indexes for diesel fuel, basic organic chemicals, jet fuel, residual fuels, and beef and veal also moved down. Conversely, prices for fresh fruits and melons jumped 48.9 percent. The indexes for construction machinery and equipment and for residential natural gas also increased. (See table 4.)

Final demand services: Prices for final demand services edged down 0.1 percent in December after increasing for three straight months. The decline was led by a 0.3-percent decrease in the index for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services fell 0.2 percent. In contrast, the index for final demand services less trade, transportation, and warehousing inched up 0.1 percent.

Product detail: The December decrease in prices for final demand services was led by margins for food retailing, which fell 2.5 percent. The indexes for cellular phone and other wireless telecommunication services, automotive fuels and lubricants retailing, residential real estate loans (partial), and airline passenger services also moved lower. Conversely, prices for guestroom rental rose 2.9 percent. The indexes for inpatient care, machinery and equipment parts and supplies wholesaling, and long-distance motor carrying also increased.

Intermediate Demand by Commodity Type

Within intermediate demand in December, prices for processed goods declined 0.9 percent, the index for unprocessed goods increased 11.2 percent, and prices for services edged up 0.1 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved down 0.9 percent in December, the largest decline since falling 0.9 percent in February 2016. Over half of the December decrease can be attributed to prices for processed energy goods, which dropped 2.6 percent. The index for processed materials less foods and energy fell 0.7 percent. In contrast, prices for processed foods and feeds rose 0.5 percent. In 2018, the index for processed goods for intermediate demand moved up 3.0 percent compared with a 5.0-percent advance in 2017.

Product detail: In December, a major factor in the decline in the index for processed goods for intermediate demand was prices for diesel fuel, which dropped 9.7 percent. The indexes for basic organic chemicals, gasoline, jet fuel, residual fuels, and beef and veal also moved lower. Conversely, prices for perishable prepared foods jumped 17.7 percent. The indexes for utility natural gas and motor vehicle parts also advanced. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand jumped 11.2 percent in December, the largest increase since a 12.3-percent advance in November 2006. Over 80 percent of the broad-based rise in December can be traced to prices for unprocessed energy materials, which surged 24.1 percent. The indexes for unprocessed foodstuffs and feedstuffs and for unprocessed nonfood materials less energy climbed 3.1 percent and 1.5 percent, respectively. In 2018, prices for unprocessed goods for intermediate demand moved up 9.1 percent after advancing 5.0 percent in 2017.

Product detail: Most of the December rise in the index for unprocessed goods for intermediate demand is attributable to a 64.3-percent jump in natural gas prices. The indexes for fresh fruits and melons; slaughter cattle; hay, hayseeds, and oilseeds; fresh vegetables, except potatoes; and raw cotton also moved higher. In contrast, prices for crude petroleum declined 3.7 percent. The indexes for slaughter chickens and logs, bolts, timber, pulpwood, and wood chips also moved lower.

Services for intermediate demand: The index for services for intermediate demand edged up 0.1 percent in December, the fourth consecutive advance. The December increase can be traced to margins for trade services for intermediate demand, which rose 0.2 percent. Conversely, prices for transportation and warehousing services for intermediate demand fell 0.2 percent. The index for services less trade, transportation, and warehousing for intermediate demand was unchanged. In 2018, prices for services for intermediate demand climbed 3.1 percent after moving up 2.9 percent in 2017.

Product detail: In December, a major factor in the advance in prices for services for intermediate demand was the index for machinery and equipment parts and supplies wholesaling, which increased 1.1 percent. The indexes for gross rents for retail properties, deposit services (partial), accounting services (partial), and paper and plastics products wholesaling also moved higher. In contrast, prices for airline passenger services declined 1.5 percent. The indexes for television advertising time sales; business loans (partial); and metals, minerals, and ores wholesaling also decreased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand inched up 0.1 percent in December after edging down 0.1 percent in November. In December, the index for total services inputs to stage 4 intermediate demand rose 0.4 percent. Conversely, prices for total goods inputs fell 0.3 percent. (See table D.) Increases in the indexes for gross rents for retail properties, fresh fruits and melons, machinery and equipment parts and supplies wholesaling, motor vehicle parts, and paper and plastics products wholesaling outweighed declines in prices for diesel fuel, gasoline, basic organic chemicals, and business loans (partial). (See table 6.) In 2018, the index for stage 4 intermediate demand advanced 3.1 percent after climbing 3.4 percent in 2017.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand fell 1.2 percent in December, the largest decline since a 1.8-percent decrease in September 2015. In December, the index for total goods inputs to stage 3 intermediate demand dropped 2.5 percent. In contrast, prices for total services inputs moved up 0.2 percent. Decreases in the indexes for gasoline; basic organic chemicals; jet fuel; diesel fuel; asphalt; and metals, minerals, and ores wholesaling outweighed higher prices for gross rents for retail properties, slaughter cattle, and natural gas. In 2018, the index for stage 3 intermediate demand rose 1.8 percent following a 4.8-percent increase in 2017.

Stage 2 intermediate demand: The index for stage 2 intermediate demand advanced 3.6 percent in December, the largest monthly rise on record (data available back to December 2009). In December 2018, prices for total goods inputs to stage 2 intermediate demand jumped 8.7 percent. Conversely, the index for total services inputs moved down 0.2 percent. Increases in prices for natural gas; accounting services (partial); hay, hayseeds, and oilseeds; utility natural gas; plastic resins and materials; and guestroom rental outweighed declines in the indexes for staffing services, crude petroleum, and basic organic chemicals. In 2018, prices for stage 2 intermediate demand climbed 5.7 percent after rising 3.7 percent in 2017.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand moved down 0.8 percent in December, the largest decline since a 1.2-percent drop in December 2015. In December 2018, the index for total goods inputs to stage 1 intermediate demand fell 1.5 percent. In contrast, prices for total services inputs inched up 0.1 percent. Decreases in the indexes for diesel fuel; basic organic chemicals; gasoline; cellular phone and other wireless telecommunication services; business loans (partial); and metals, minerals, and ores wholesaling outweighed rising prices for gross rents for retail properties, natural gas, and deposit services (partial). In 2018, the index for stage 1 intermediate demand advanced 3.5 percent after increasing 5.7 percent in 2017.

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The Producer Price Index for January 2019 is scheduled to be released on Thursday, February 14, 2019 at 8:30 a.m. (EST).