July 2012 Producer Price Index

Historical release narrative reproduced from the official public-domain source. Statistical tables, standard technical appendices, administrative material and attendance rosters are omitted; formatting is adapted for reading. Figures retain the release's historical context and may have been revised. Consult the linked source for the complete document.

The Producer Price Index for finished goods rose 0.3 percent in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This advance followed a 0.1-percent increase in June and a 1.0-percent decline in May. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved down 0.9 percent in July, and the crude goods index advanced 1.8 percent. On an unadjusted basis, prices for finished goods rose 0.5 percent for the 12 months ended July 2012, continuing the trend of slowing year-over-year increases following a 7.0-percent rise for the 12 months ended September 2011. (See table A.)

Stage-of-Processing Analysis

Finished goods

In July, the increase in the finished goods index was led by prices for finished goods less foods and energy, which moved up 0.4 percent. Also contributing to higher finished goods prices, the index for finished consumer foods advanced 0.5 percent. By contrast, prices for finished energy goods decreased 0.4 percent.

Finished core: The index for finished goods less foods and energy moved up 0.4 percent in July, the largest rise since a 0.6-percent increase in January 2012. Over forty percent of the July advance can be attributed to prices for light motor trucks, which climbed 1.6 percent. The indexes for pharmaceutical preparations and cigarettes also were major factors in the rise in finished core prices. (See table 2.)

Finished foods: The index for finished consumer foods advanced 0.5 percent in July, the same rate as in June. Over half of the July increase can be traced to prices for beef and veal, which climbed 3.8 percent. Higher prices for pork also contributed significantly to the advance in the finished foods index.

Finished energy: The index for finished energy goods moved down 0.4 percent in July, the fifth straight decrease. Most of the July decline is attributable to prices for gasoline, which fell 3.1 percent.

Intermediate goods

The Producer Price Index for intermediate materials, supplies, and components fell 0.9 percent in July, the fourth consecutive decline. Prices for intermediate materials less foods and energy led the July decrease, moving down 0.9 percent. The index for intermediate energy goods dropped 1.6 percent. By contrast, prices for intermediate foods and feeds advanced 1.4 percent. For the 12 months ended in July, the intermediate goods index fell 2.6 percent, the largest decrease since a 7.7-percent decline for the 12 months ended October 2009. (See table B.)

Intermediate core: Prices for intermediate materials less foods and energy moved down 0.9 percent in July, the largest decrease since a 2.4-percent drop in December 2008. About half of the July decline can be attributed to the index for basic organic chemicals, which fell 6.3 percent. Lower prices for steel mill products and fabricated structural metal also were factors in the decrease in the intermediate core index. (See table 2.)

Intermediate energy: The index for intermediate energy goods fell 1.6 percent in July, the fourth straight decline. A 6.1-percent drop in prices for lubricating oil base stocks was a significant factor in the July decrease. A decline in the index for gasoline also contributed to the decrease in intermediate energy goods prices.

Intermediate foods: Prices for intermediate foods and feeds climbed 1.4 percent in July, the largest advance since a 1.4-percent increase in August 2011. More than half of the July rise can be traced to the index for prepared animal feeds, which moved up 3.1 percent.

Crude goods

The Producer Price Index for crude materials for further processing advanced 1.8 percent in July. For the 3-month period ended in July, prices for crude materials fell 5.0 percent after declining 6.2 percent from January to April. In July, the monthly increase in the crude goods index was mostly attributable to prices for crude foodstuffs and feedstuffs, which jumped 5.2 percent. Also contributing to the July increase, prices for crude energy materials climbed 0.6 percent. By contrast, the index for crude nonfood materials less energy fell 1.1 percent. (See table B.)

Crude foods: Prices for crude foodstuffs and feedstuffs increased 5.2 percent in July. From April to July, the index for crude foods advanced 1.2 percent subsequent to a 0.5-percent decline for the 3 months ended in April. In July, the monthly rise was mostly the result of a 27.8-percent jump in the grains index. Higher prices for hay, hayseeds, and oilseeds and for raw milk also contributed to the advance in the crude foods index. (See table 2.)

Crude energy: The index for crude energy materials rose 0.6 percent in July. For the 3 months ended in July, prices for crude energy materials declined 9.3 percent compared with a 14.2- percent drop from January to April. The monthly increase in July was mostly attributable to a 12.3-percent advance in prices for natural gas. Additionally, the index for coal rose 0.8 percent.

Crude core: Prices for crude nonfood materials less energy declined 1.1 percent in July. From April to July, the crude core index fell 6.4 percent following a 1.6-percent decrease in the prior 3- month period. A 9.0-percent decline in prices for iron and steel scrap was a major contributor to the monthly decrease in July.

Services Analysis

Trade industries: The Producer Price Index for the net output of total trade industries edged down 0.1 percent in July, the first decline since a 0.3-percent decrease in December 2011. (Trade indexes measure changes in margins received by wholesalers and retailers.) Leading the July decline, margins received by clothing and clothing accessories stores fell 6.4 percent. Lower margins received by gasoline stations and grocery stores also were major factors in the decrease in the total trade industries index.

Transportation and warehousing industries: The Producer Price Index for the net output of transportation and warehousing industries moved down 0.4 percent in July following a 0.2- percent decline in June. About sixty percent of the July decrease can be traced to a 1.3-percent drop in prices received by the scheduled air transportation industry group. Lower prices received by the industry for couriers and express delivery services and by line-haul railroads also contributed to the decline in the index for transportation and warehousing industries.

Traditional service industries: The Producer Price Index for the net output of total traditional service industries was unchanged in July after inching up 0.1 percent in June. In July, higher prices received by the industry group for securities, commodity contracts, and related financial investment services and by the passenger car rental industry offset falling prices received by the industry group for depositary credit intermediation and the software publishing industry.

Resampling of Industries

Effective with the release of data for July 2012, the Producer Price Index (PPI) includes data for 34 resampled industries classified according to the North American Industry Classification System (NAICS). The Bureau of Labor Statistics periodically updates the sample of producers providing data for the PPI to reflect current conditions more accurately when the structure, membership, technology, or product mix of an industry shifts. The first results of this systematic process were published in July 1986. Subsequent efforts have been completed at 6-month intervals.

Industries selected for resampling in July 2012 are noted below. For information on specific index additions, deletions, and recodes that are effective with this semiannual update, see the July 2012 issue of the PPI Detailed Report online at http://www.bls.gov/ppi/ppidr201207.pdf, or contact the PPI Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691-7705.

NAICS Code Industry

213112 Support activities for oil and gas operations 311224 Oilseed processing 311340 Nonchocolate confectionery manufacturing 311352 Confectionery manufacturing from purchased chocolate 312140 Distilleries 314994 Rope, cordage, twine, tire cord, and tire fabric mills 321113 Sawmills 325211 Plastics material and resins manufacturing 325520 Adhesive manufacturing 326121 Unlaminated plastics profile shape manufacturing 326130 Laminated plastics plate, sheet (except packaging), and shape manufacturing 327110 Pottery, ceramics and plumbing fixture manufacturing 327212 Other pressed and blown glass and glassware manufacturing 331315 Aluminum sheet, plate, and foil manufacturing 331491 Nonferrous metal (except copper and aluminum) rolling, drawing, and extruding 331511 Iron foundries 331512 Steel investment foundries 333243 Sawmill, woodworking, and paper machinery manufacturing 333921 Elevator and moving stairway manufacturing 335121 Residential electric lighting fixture manufacturing 335313 Switchgear and switchboard apparatus manufacturing 336310 Motor vehicle gasoline engine and engine parts manufacturing 336330 Motor vehicle steering and suspension parts manufacturing 336340 Motor vehicle brake system manufacturing 336350 Motor vehicle power train components manufacturing 337122 Nonupholstered wood household furniture manufacturing 339112 Surgical and medical instrument manufacturing 339113 Surgical appliance and supplies manufacturing 339995 Burial casket manufacturing 442110 Furniture stores 442210 Floor covering stores 445200 Specialty food stores 541610 Management consulting services 623110 Nursing care facilities