March 2010 Producer Price Index

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The Producer Price Index for Finished Goods rose 0.7 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This advance followed a 0.6-percent decline in February and a 1.4-percent increase in January. At the earlier stages of processing, prices received by manufacturers of intermediate goods climbed 0.6 percent in March and the crude goods index rose 3.2 percent. On an unadjusted basis, prices for finished goods advanced 6.0 percent for the 12 months ended March 2010, their largest year-over-year gain since an 8.8-percent rise in September 2008. (See table A.)

Stage-of-Processing Analysis

Finished goods

In March, over seventy percent of the increase in the finished goods index can be attributed to a 2.4-percent jump in prices for consumer foods. Also contributing to higher finished goods prices, the index for finished energy goods advanced 0.7 percent and prices for finished goods other than foods and energy inched up 0.1 percent.

Finished foods: The index for finished consumer foods climbed 2.4 percent in March, its sixth straight monthly increase. This advance can be primarily traced to a 49.3-percent surge in prices for fresh and dry vegetables. The indexes for meats and eggs for fresh use also contributed to the rise in prices for finished consumer foods. (See table 2.)

Finished energy: The index for finished energy goods moved up 0.7 percent in March after falling 2.9 percent in February. Leading this advance, gasoline prices rose 2.1 percent, their fifth increase in the last six months. Higher prices for residential electric power also were a factor in the rise in the finished energy goods index.

Finished core: In March, prices for finished goods other than foods and energy edged up 0.1 percent for the second consecutive month. About eighty-five percent of the March advance can be traced to the index for jewelry and jewelry products, which jumped 4.9 percent.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components moved up 0.6 percent in March, its sixth straight monthly advance. Most of the March rise can be attributed to higher prices for intermediate materials less foods and energy, which climbed 0.7 percent. The index for intermediate energy goods also contributed to this advance, increasing 0.4 percent. By contrast, prices for intermediate foods and feeds fell 0.5 percent. On a 12-month basis, prices for intermediate goods moved up 7.7 percent, their largest increase since a 9.8-percent rise in October 2008. (See table B.)

Intermediate core: The index for intermediate materials less foods and energy climbed 0.7 percent, its third consecutive monthly increase. Prices for basic organic chemicals moved up 3.2 percent, accounting for a third of the intermediate core advance. The indexes for steel mill products and for converted paper and paperboard products also contributed to higher intermediate core prices. (See table 2.)

Intermediate energy: Prices for intermediate energy goods advanced 0.4 percent in March, their fifth increase in the last six months. A major contributor to the March increase was the index for commercial electric power, which moved up 0.8 percent. Higher prices for gasoline and lubricating oil materials also had a significant impact on the intermediate energy goods index.

Intermediate foods: The index for intermediate foods and feeds fell 0.5 percent in March, its third straight monthly decline. Contributing significantly to the March decrease, prices for prepared animal feeds moved down 2.9 percent.

Crude goods

The Producer Price Index for Crude Materials for Further Processing increased 3.2 percent in March. For the 3-month period ending in March, crude materials prices rose 9.2 percent, compared with a 12.4-percent jump from September to December 2009. In March, about forty percent of the broad-based monthly climb can be attributed to a 3.4-percent increase in the index for crude foodstuffs and feedstuffs. Also contributing to the March rise, prices for crude nonfood materials less energy moved up 6.0 percent and the index for crude energy materials increased 1.3 percent. (See table B.)

Crude foods: The index for crude foodstuffs and feedstuffs rose 3.4 percent in March. From December to March, prices for crude foodstuffs and feedstuffs climbed 5.2 percent, subsequent to a 10.3-percent advance for the 3 months ended December 2009. About seventy percent of the monthly March increase in prices for crude foodstuffs and feedstuffs can be traced to a 6.4- percent rise in the index for slaughter livestock. Higher prices for fresh and dry vegetables and for both unprocessed finfish and shellfish also were factors in the March crude foodstuffs and feedstuffs increase. (See table 2.)

Crude core: The index for crude nonfood materials less energy moved up 6.0 percent in March. For the 3-month period ending in March, crude core prices jumped 12.3 percent, after increasing 5.8 percent from September to December 2009. More than half of the monthly rise in March in the crude core index can be attributed to a 12.3-percent advance in prices for iron and steel scrap. An increase in the index for nonferrous scrap also contributed to higher crude core prices.

Crude energy: The index for crude energy materials increased 1.3 percent in March. From December to March, crude energy prices moved up 10.8 percent, following an 18.7-percent jump in the previous 3-month period. In March, the monthly advance in the index for crude energy materials can be mostly attributed to a 12.1-percent rise in crude petroleum prices.

Services Analysis

Trade industries: The Producer Price Index for the Net Output of Total Trade Industries advanced 0.5 percent in March, its second consecutive monthly rise. (Trade indexes measure changes in margins received by wholesalers and retailers.) Leading the March increase, margins received by wholesale trade industries increased 2.4 percent. Higher margins received by non- discount department stores and new car dealers also were factors in the advance in the total trade industries index.

Transportation and warehousing industries: The Producer Price Index for the Net Output of Transportation and Warehousing Industries moved up 0.6 percent in March following a 0.4- percent decline a month earlier. Most of the March increase can be attributed to a 3.7-percent gain in prices received by the scheduled passenger air transportation industry. Higher prices received by couriers and line-haul railroads also contributed to the rise in the transportation and warehousing industries index.

Traditional service industries: The Producer Price Index for the Net Output of Total Traditional Service Industries fell 0.5 percent in March, after advancing in each of the prior two months. Leading this decrease, prices received by the depository credit intermediation industry group moved down 6.4 percent. Lower prices received by non-casino hotels and motels and by investment bankers and securities dealers also contributed to the decline in the total traditional service industries index.