March 2011 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 1.6-percent increase in February and a 0.8-percent gain in January. At the earlier stages of processing, prices received by manufacturers of intermediate goods climbed 1.5 percent in March and the crude goods index declined 0.5 percent. On an unadjusted basis, prices for finished goods moved up 5.8 percent for the 12 months ended March 2011, the largest year-over-year gain since a 5.9-percent advance in March 2010. (See table A.)

Stage-of-Processing Analysis

Finished goods

In March, nearly ninety percent of the increase in the finished goods index can be attributed to a 2.6-percent rise in prices for finished energy goods. Also contributing to the advance in the finished goods index, prices for goods other than foods and energy moved up 0.3 percent. By contrast, the index for finished consumer foods moved down 0.2 percent in March.

Finished energy: Prices for finished energy goods rose 2.6 percent in March, the sixth consecutive monthly advance. Over eighty percent of the March increase can be attributed to the gasoline index, which climbed 5.7 percent. Higher prices for liquefied petroleum gas and home heating oil also were factors in the rise in the finished energy goods index. (See table 2.)

Finished core: The index for finished goods other than foods and energy moved up 0.3 percent in March, the fourth consecutive increase. About one-third of this advance can be traced to prices for light motor trucks, which rose 0.7 percent. An increase in the passenger car index also contributed to higher finished core prices.

Finished foods: Prices for finished consumer foods fell 0.2 percent in March, the first decline since August 2010. Leading the March decrease, the index for fresh and dry vegetables dropped 21.4 percent.

Intermediate goods

The Producer Price Index for intermediate materials, supplies, and components moved up 1.5 percent in March, the eighth consecutive advance. The broad-based March increase was led by prices for intermediate energy goods, which rose 2.9 percent. The indexes for intermediate goods less foods and energy and for intermediate foods and feeds also were factors in the intermediate goods advance, moving up 0.9 percent and 2.2 percent, respectively. For the 12 months ended March 2011, prices for intermediate goods climbed 8.9 percent, the largest advance since rising 9.8 percent in October 2008. (See table B.)

Intermediate energy: The index for intermediate energy goods increased 2.9 percent in March, the eighth straight advance. Prices for jet fuel, which rose 8.4 percent, contributed significantly to the March increase. Higher prices for gasoline and lubricating oil base stocks also were major factors in the rise in the intermediate energy goods index. (See table 2.)

Intermediate core: Prices for intermediate goods less foods and energy advanced 0.9 percent in March. Over thirty percent of the increase can be attributed to the index for basic organic chemicals, which moved up 3.4 percent. Higher prices for steel mill products also contributed to the advance in intermediate core prices.

Intermediate foods: The intermediate foods and feeds index rose 2.2 percent in March, the eighth straight monthly increase. A 4.8-percent jump in prices for dairy products accounted for a third of the March advance in the intermediate foods index.

Crude goods

The Producer Price Index for crude materials for further processing fell 0.5 percent in March. For the 3 months ended in March, prices for crude materials advanced 6.2 percent, subsequent to a 13.0-percent jump for the 3 months ended December 2010. Leading the monthly decrease in March, the index for crude nonfood materials less energy fell 2.3 percent. Also contributing to this decline, prices for crude energy materials moved down 0.5 percent. By contrast, the index for crude foodstuffs and feedstuffs rose 0.3 percent in March. (See table B.)

Crude core: The index for crude nonfood materials less energy fell 2.3 percent in March. From December to March, crude core prices advanced 3.9 percent compared with a 9.5-percent increase from September to December. In March, a major factor in the monthly decrease in crude core prices was the index for nonferrous scrap, which fell 2.1 percent. Lower prices for grains and corrugated wastepaper also contributed to the decline in the crude core index. (See table 2.)

Crude energy: The index for crude energy materials fell 0.5 percent in March. For the 3 months ended in March, crude energy prices rose 2.4 percent compared with a 24.0-percent jump for the 3 months ended December 2010. In March, the decrease in prices for crude energy materials was the result of an 11.7-percent decline in the natural gas index.

Crude food: The index for crude foodstuffs and feedstuffs rose 0.3 percent in March. For the 3-month period ended in March, prices for crude foods climbed 11.7 percent after advancing 4.3 percent for the 3 months ended December 2010. A 12.8-percent rise in the fluid milk index led the March increase in crude food prices.

Services Analysis

Trade Industries: The Producer Price Index for the net output of total trade industries moved up 1.1 percent in March following a 1.5-percent increase in the prior month. (Trade indexes measure changes in margins received by wholesalers and retailers.) Over half of the March advance can be traced to a 14.0-percent jump in margins received by department stores. Higher margins received by wholesale trade industries and by motor vehicle and parts dealers also contributed significantly to the rise in the total trade industries index.

Transportation and warehousing industries: The Producer Price Index for the net output of transportation and warehousing industries climbed 2.4 percent in March, the third straight increase. Over forty percent of the March advance is attributable to prices received by the scheduled air transportation industry group, which rose 6.2 percent. Higher prices received by the truck transportation sector and line-haul railroads also were major factors in the increase in the transportation and warehousing industries index.

Traditional services: The Producer Price index for the net output of total traditional service industries was unchanged in March after decreasing 0.2 percent in the previous month. In March, higher prices received by investment bankers and securities dealers and by the accommodation sector were offset by lower prices received by the industries for commercial banking and offices of certified public accountants.