August 1999 Producer Price Index

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The Producer Price Index for Finished Goods increased 0.5 percent in August, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This rise followed a 0.2-percent advance in July and a 0.1-percent decrease in June. The index for finished goods other than foods and energy fell 0.1 percent, after showing no change in the previous month. Prices received by producers of intermediate goods rose 0.8 percent in August, after increasing 0.6 percent in July. The crude goods index advanced 4.6 percent, following a 0.2-percent drop in the previous month. (See table A.)

Change in Except finished Inter- goods foods from 12 mediate Crude and months Month Total Foods Energy energy ago goods goods (unadj.) 1998 Aug. -0.3 -0.3 -1.9 0.0 -0.8 -0.3 -4.2 Sept. .2 .2 -.4 .3 -.9 -.3 -1.8 Oct. .3 .4 .8 .1 -.7 -.2 2.5 Nov. -.2 -.4 -1.3 .1 -.6 -.2 -.1 Dec. .5 0 -1.8 1.0 0 -.7 -3.6

The finished consumer foods index increased 0.4 percent in August, following a 0.9-percent decline in the prior month, and was primarily responsible for the finished goods acceleration from July to August. Finished energy goods prices rose somewhat more than last month. The capital equipment index showed no change, after a small decline in the previous month. By contrast, prices for finished consumer goods excluding foods and energy fell, after rising a month ago.

For the first eight months of 1999, the Producer Price Index for Finished Goods increased at a 2.3-percent seasonally adjusted annual rate (SAAR), after registering no change during all of 1998. This acceleration can be attributed to the finished energy goods index, which advanced at a 22.0-percent SAAR from December 1998 to August 1999, following an 11.7- percent drop in 1998. By contrast, the index for finished goods other than foods and energy declined at a 0.4-percent SAAR over the past eight months, after advancing 2.5 percent in the 1998 calendar year.

Before seasonal adjustment, the Producer Price Index for Finished Goods moved up 0.6 percent in August to stand at 133.7 (1982=100). From August 1998 to August 1999, the finished goods index increased 2.3 percent. Over the past 12 months, prices for finished energy goods advanced 10.9 percent. The index for finished goods other than foods and energy increased 1.3 percent, while the index for finished consumer foods rose 0.4 percent. Prices received by domestic producers of intermediate goods increased 1.2 percent during the 12 months ended in August 1999, and the index for crude materials advanced 8.3 percent during the same period.

Finished goods

Prices for finished consumer foods turned up 0.4 percent in August, following a 0.9-percent decline in July. Pork prices moved up 7.1 percent, after falling 3.8 percent in the prior month. Prices for beef and veal, fresh and dry vegetables, and processed young chickens fell less than a month ago. The indexes for dairy products and soft drinks rose more than in the previous month. Conversely, prices for eggs for fresh use increased 2.8 percent in August, following a 7.1-percent advance in July. The indexes for roasted coffee and for processed fruits and vegetables fell, after showing no change last month. Prices for finfish and shellfish turned down, after rising in the prior month.

The index for finished energy goods advanced 3.7 percent in August, following a 3.4-percent increase in July. Prices for liquefied petroleum gas turned up 15.7 percent, after posting a 1.1-percent decline the month before. The indexes for residential natural gas and residential electric power rose more than in the previous month. By contrast, gasoline prices increased 9.1 percent, following a 12.7-percent advance in July. Rising prices for home heating oil also decelerated from the prior month. The index for finished lubricants turned down, after rising last month.

Capital equipment prices showed no change in August, following a 0.1- percent decline in July. Rising prices for civilian aircraft, commercial furniture, construction machinery and equipment, and metal cutting machine tools were offset by falling prices for light motor trucks, electronic computers, x-ray and electromedical equipment, and heavy motor trucks.

The index for finished consumer goods other than foods and energy fell 0.1 percent in August, following a 0.1-percent rise in July. Prices for sanitary papers and health products fell 2.5 percent, after registering a 1.4-percent gain in the prior month. The indexes for alcoholic beverages, soaps and synthetic detergents, and mobile homes also turned down, following increases in the previous month. Prescription drug prices rose less than last month, and the women's apparel index fell more than in July. On the other hand, prices for tires, tubes, and tread turned up 0.8 percent, after declining 1.6 percent in the previous month. Passenger car prices fell less than a month ago. The men's and boys' apparel index showed no change, following a decline in the prior month. Prices for tobacco products increased slightly, after posting no change in July.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components registered its sixth consecutive increase in August by advancing 0.8 percent, seasonally adjusted. Prices for intermediate goods rose 0.6- percent in July. During the first eight months of 1999, prices for intermediate goods rose at a 4.0-percent SAAR, following a 3.3-percent decrease in 1998. In August, the index for intermediate foods and feeds turned up, after falling in the prior month. Prices for intermediate energy goods and for nondurable manufacturing materials rose more than in the previous month. By contrast, the index for materials and components for construction turned down, after rising a month ago. Durable manufacturing material prices rose less than in the prior month. Excluding foods and energy, the index for intermediate materials increased 0.2 percent, following a 0.4-percent advance in July. (See table B.)

The index for intermediate foods and feeds advanced 1.1 percent, after falling 1.4 percent a month ago. Crude vegetable oil prices rose 9.5 percent, following a 10.5-percent decline in the previous month. The indexes for pork, prepared animal feeds, and flour also turned up, after declining in the prior month. The indexes for fluid milk products, confectionery materials, and for beef and veal fell less than a month ago. By contrast, refined sugar prices fell 0.3 percent, following a 0.2-percent gain in July. The index for consumer-type canned milk products fell, after showing no change in the prior month.

The index for intermediate energy materials rose 3.8 percent, after increasing 2.9 percent in July. Prices for commercial electric power advanced 2.2 percent, following a 0.2-percent drop a month ago. The liquefied petroleum gas index also turned up, after falling in the previous month. Prices for industrial electric power, residual fuel, commercial natural gas, and jet fuels rose more than in the prior month. Conversely, the diesel fuel index increased 4.1 percent, following a 15.4-percent gain a month ago. Prices for gasoline and industrial natural gas also rose less than in the prior month.

The index for materials for nondurable manufacturing increased 0.6 percent in August, following a 0.4-percent gain a month ago. Basic inorganic chemical prices turned up 1.5 percent, after a 2.1-percent drop in the prior month. The indexes for paint materials, phosphates, and synthetic rubber also rose, after falling in the previous month. Prices for plastic resins and materials, woodpulp, and paperboard increased more than in the prior month. By contrast, paper prices turned down 0.4 percent, following a 0.6-percent rise a month ago. The indexes for basic organic chemicals and for inedible fats and oils also fell, after rising in July. Gray fabric prices fell more than in the previous month.

The index for materials and components for construction fell 0.1 percent in August, following a 0.7-percent gain in July. Softwood lumber prices turned down 6.0 percent, after a 5.9-percent advance in the prior month. The indexes for plywood, wiring devices, and for plumbing fixtures and brass fittings also fell, following increases in the previous month. Prices for plastic construction products and millwork rose less than a month ago. On the other hand, the index for gypsum products turned up 5.0 percent, following a 0.1-percent decline in the prior month. The air conditioning and refrigeration equipment index also rose, after falling in July. Nonferrous wire and cable prices rose more than in the previous month.

The durable manufacturing materials index rose 0.2 percent, following a 0.8-percent advance in July. Plywood prices fell 2.7 percent, after rising 6.2 percent in the prior month. The indexes for copper and brass mill shapes, building paper and board, and for copper cathode and refined copper rose less than in the previous month. By contrast, steel mill products rose 0.2 percent, following a 0.5-percent drop a month ago. Hardwood lumber prices also turned up, after falling in the previous month. The index for aluminum mill shapes rose more than in July.

Crude Goods

The Producer Price Index for Crude Materials for Further Processing rose 4.6 percent in August, seasonally adjusted, following a 0.2-percent decline in July. This index advanced at an 18.6-percent SAAR during the first eight months of 1999, after falling 16.7 percent during 1998. In August, prices for crude foodstuffs and feedstuffs increased, after falling in the prior month. The index for crude energy materials rose more than last month. By contrast, prices for basic industrial materials advanced at a slower pace than in July. (See table B.)

The index for crude foodstuffs and feedstuffs increased 3.8 percent, following a 4.8-percent decrease in July. Corn prices turned up 25.7 percent, after falling 16.7 percent a month ago. The indexes for soybeans, slaughter cattle, wheat, and slaughter hogs also rose, after decreasing in the prior month. On the other hand, prices for slaughter broilers and fryers and for unprocessed shellfish fell more than in the prior month. The indexes for Irish potatoes for processing, Louisiana rough rice, and raw cane sugar fell, after rising in July.

Prices for crude energy materials rose 7.2 percent in August, following a 3.7-percent increase in July. This acceleration was led by the index for natural gas, which advanced 10.6 percent, after rising 3.2 percent in the prior month. In addition, coal prices fell less than in July. By contrast, the index for crude petroleum increased 6.5 percent, following a 10.0-percent advance last month.

Basic industrial material prices rose 1.8 percent, following a 2.3- percent rise in July. The indexes for aluminum base scrap and copper ores also increased at a slower pace in August than in the previous month. Prices for wastepaper, copper base scrap, and pulpwood logs turned down, after rising in July. By contrast, the index for raw cotton turned up 5.9 percent, following a 10.3-percent drop in the prior month. Prices for cattle hides, iron and steel scrap, and gold ores also rose, after falling in the prior month.

Net output price indexes for mining, manufacturing, and other industries

Mining. The Producer Price Index for the net output of total domestic mining industries rose 6.3 percent in August, after registering a 2.9- percent advance in July. (Net output price indexes are not seasonally adjusted.) Prices received by the crude petroleum, natural gas, and natural gas liquids industry rose 9.6 percent percent, following a 5.0- percent increase a month ago. The index for bituminous coal and lignite mining fell less than in July. The industry index for gold ores turned up, following a decline last month. By contrast, the index for oil and gas well drilling turned down 3.7 percent, after rising 0.2 percent in July. Price increases in the copper ores mining industry rose less than a month ago. The index for the oil and gas exploration services industry moved down, after showing no change in the previous month. In August, the Producer Price Index for the net output of total domestic mining industries stood at 83.3 (December 1984=100), 23.0 percent above its year-ago level.

Manufacturing. The Producer Price Index for the net output of total domestic manufacturing industries increased 0.6 percent in August, after posting a 0.3-percent rise in July. The index for the food and kindred products industry group rose 0.8 percent, following a 0.5-percent decrease in the previous month. Prices for the photographic equipment and supplies industry also turned up, after declining in July. The index for the transportation equipment industry group fell less than in the prior month. Prices for the machinery and equipment (except electrical) industry group were unchanged in August, after decreasing in July. By contrast, the index for the lumber and wood products (except furniture) industry group turned down 1.1 percent, after rising 2.0 percent a month earlier. Price increases for the petroleum refining industry group increased less than in July. The August Producer Price Index for the net output of total domestic manufacturing industries stood at 129.0 (December 1984=100), 2.4 percent above its year-ago level.

Other. Among other industries in July, the index for trucking (except local) increased 0.8 percent; the index for skilled and intermediate care facilities moved up 1.2 percent; and the air courier services index advanced 2.5 percent. Other increases include general medical and surgical hospitals, travel agencies, cable and other pay television services, scheduled air transportation, and engineering services. On the other hand, prices for the real estate agents and managers, life insurance carriers, truck rental and leasing (without drivers), radio broadcasting, operators and lessors of nonresidential buildings, and offices and clinics of doctors of medicine industries fell in August.

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