June 2010 Producer Price Index

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The Producer Price Index for Finished Goods fell 0.5 percent in June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This decrease followed declines of 0.3 percent in May and 0.1 percent in April. At the earlier stages of processing, prices received by producers of intermediate goods moved down 0.9 percent in June and the crude goods index dropped 2.4 percent. On an unadjusted basis, prices for finished goods rose 2.8 percent for the 12 months ended June 2010, their third straight month of slowing year-over-year advances following a 6.0- percent increase for the 12 months ended in March. (See table A.)

Stage-of-Processing Analysis

Finished goods

In June, over eighty percent of the 0.5-percent decrease in the finished goods index can be traced to prices for consumer foods, which fell 2.2 percent. Also contributing to lower finished goods prices, the index for finished energy goods declined 0.5 percent. By contrast, prices for finished goods other than foods and energy inched up 0.1 percent in June.

Finished foods: The index for finished consumer foods fell 2.2 percent in June, its third straight decline following six consecutive advances. Over half of the June decrease can be attributed to prices for fresh and dry vegetables, which dropped 21.8 percent. Lower prices for fresh fruits and melons and for meats also were significant factors in the decline in the index for finished consumer foods. (See table 2.)

Finished energy goods: Prices for finished energy goods moved down 0.5 percent in June, their third straight decrease. Leading the June decline, the gasoline index fell 1.6 percent. Lower prices for home heating oil also contributed to the decrease in the index for finished energy goods.

Finished core: The index for finished goods less foods and energy edged up 0.1 percent in June, its eighth consecutive monthly rise. Leading the June advance, cigarette prices increased 1.4 percent.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components moved down 0.9 percent in June, its first decline since July 2009. About two-thirds of the June decrease can be attributed to lower prices for intermediate energy goods, which fell 2.6 percent. The index for intermediate materials less foods and energy also contributed to the overall decline, moving down 0.4 percent. By contrast, prices for intermediate foods and feeds inched up 0.1 percent. On a 12-month basis, prices for intermediate goods climbed 6.4 percent, their seventh consecutive month of year-over-year advances. (See table B.)

Intermediate energy: The index for intermediate energy goods moved down 2.6 percent in June, its first decrease since February 2010. Accounting for about thirty percent of the June decline was a 7.4-percent drop in diesel fuel prices. The indexes for commercial electric power and jet fuel also contributed significantly to lower intermediate energy goods prices. (See table 2.)

Intermediate core: The index for intermediate materials less foods and energy moved down 0.4 percent in June, its first decrease since May 2009. Nearly half of the June decline can be attributed to a 4.6-percent drop in prices for primary basic organic chemicals. The index for nonferrous mill shapes also was a factor in the intermediate core decline.

Intermediate foods: The index for intermediate foods and feeds inched up 0.1 percent in June, its third consecutive monthly increase. This advance was led by the index for soybean cake and meal, which climbed 3.9 percent.

Crude goods

The Producer Price Index for Crude Materials for Further Processing declined 2.4 percent in June. For the 3 months ending in June, crude material prices fell 6.2 percent after moving up 8.2 percent from December to March. In June, about eighty percent of the monthly decrease was due to the index for crude foodstuffs and feedstuffs, which dropped 5.3 percent. Lower prices for crude nonfood materials less energy also contributed to the overall decline, falling 4.8 percent. By contrast, the index for crude energy materials rose 1.7 percent in June. (See table B.)

Crude foods: The index for crude foodstuffs and feedstuffs moved down 5.3 percent in June. From March to June, prices for crude foodstuffs and feedstuffs declined 5.0 percent after climbing 5.0 percent in the prior 3-month period. Accounting for two-thirds of the June decrease, the index for slaughter livestock fell 9.1 percent. Lower prices for grains and fresh vegetables (except potatoes) also were significant factors in the decline in the crude foodstuffs and feedstuffs index. (See table 2.)

Crude core: The index for crude nonfood materials less energy decreased 4.8 percent in June. For the 3-month period ending in June, crude core prices dropped 2.6 percent. This decline followed an 11.8- percent jump from December to March. Accounting for about thirty percent of the June decrease, the index for iron and steel scrap moved down 5.1 percent. Lower copper ore prices also contributed to the decline in the crude core index.

Crude energy: The index for crude energy materials moved up 1.7 percent in June. From March to June, prices for crude energy materials fell 9.2 percent compared with a 9.0-percent increase in the previous 3-month period. About sixty percent of the June advance can be attributed to a 2.7- percent rise in the index for natural gas.

Services Analysis

Trade industries: The Producer Price Index for the Net Output of Total Trade Industries fell 2.3 percent in June. For the 12 months ending in June, the total trade industries index was unchanged. (Trade indexes measure changes in margins received by wholesalers and retailers.) Leading the monthly June decrease, margins received by merchant wholesalers of durable goods moved down 3.6 percent. Lower margins received by gasoline stations with convenience stores and discount department stores also were major factors in the decline 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 0.4 percent in June, its sixth consecutive increase. Most of the June advance can be attributed to a 1.8-percent rise in prices received by the scheduled passenger air transportation industry. Higher prices received by line-haul railroads and couriers also contributed to the advance in the transportation and warehousing industries index.

Traditional service industries: The Producer Price Index for the Net Output of Total Traditional Service Industries edged up 0.1 percent in June following no change in the prior month. Prices received by the industry group for depository credit intermediation moved up 1.5 percent. Higher prices received by direct property and casualty insurance carriers and by the passenger car rental industry also were factors in the increase in the total traditional service industries index.