October 2012 Producer Price Index

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The Producer Price Index for finished goods declined 0.2 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Prices for finished goods increased 1.1 percent in September and 1.7 percent in August. At the earlier stages of processing, prices received by manufacturers of intermediate goods edged down 0.1 percent in October, and the crude goods index moved up 0.9 percent. On an unadjusted basis, the finished goods index advanced 2.3 percent for the 12 months ended October 2012, the largest rise since a 2.8-percent increase for the 12 months ended March 2012. (See table A.)

Stage-of-Processing Analysis

Finished goods

In October, the decrease in the finished goods index is attributable to prices for finished energy goods and the index for finished goods less foods and energy, which declined 0.5 percent and 0.2 percent, respectively. By contrast, prices for finished consumer foods advanced 0.4 percent.

Finished energy: The index for finished energy goods moved down 0.5 percent in October after increasing 4.7 percent a month earlier. A 2.2-percent drop in gasoline prices accounted for most of this decrease. Declines in the indexes for home heating oil and liquefied petroleum gas also contributed to lower finished energy goods prices. (See table 2.)

Finished core: The index for finished goods less foods and energy moved down 0.2 percent in October, the first decline since a 0.1-percent decrease in November 2010. Lower prices for light motor trucks and passenger cars led the October decline, falling 1.5 percent and 1.6 percent, respectively. (On a not seasonally adjusted basis, the index for light motor trucks rose 3.9 percent and passenger car prices moved up 1.4 percent.) In accordance with usual practice, most new- model-year passenger cars and light motor trucks were introduced into the PPI in October (see Report on Quality Changes for 2013 Model Vehicles, at www.bls.gov/web/ppi/ppimotveh.htm).

Finished foods: In October, prices for finished consumer foods advanced 0.4 percent, the fifth consecutive increase. Leading the October rise, the index for dairy products climbed 3.0 percent.

Intermediate goods

The Producer Price Index for intermediate materials, supplies, and components inched down 0.1 percent in October following two consecutive increases. The October decrease was the result of a 0.6-percent decline in prices for intermediate energy goods. By contrast, the index for intermediate foods and feeds rose 0.7 percent. Prices for intermediate materials less foods and energy were unchanged. For the 12 months ended in October, the index for intermediate materials, supplies, and components rose 0.8 percent following five straight months of year-over- year decreases. (See table B.)

Intermediate energy: The index for intermediate energy goods fell 0.6 percent in October following a 4.3-percent advance in September. A major factor in the October decline was a 1.6- percent decrease in the index for industrial electric power. Lower prices for gasoline and lubricating oil base stocks also contributed significantly to the decline in the intermediate energy goods index. (See table 2.)

Intermediate foods: Prices for intermediate foods and feeds advanced 0.7 percent in October, the eighth consecutive increase. A major factor in the October rise was the index for pork, which jumped 8.1 percent. An increase in prices for dairy products also was a significant factor in the advance in the intermediate foods and feeds index.

Intermediate core: The index for intermediate goods less foods and energy was unchanged in October following a 0.6-percent advance in September. In October, higher prices for nonferrous metals were offset by lower prices for steel mill products.

Crude goods

The Producer Price Index for crude materials for further processing advanced 0.9 percent in October. For the 3 months ended in October, prices for crude materials climbed 9.7 percent following a 5.0-percent decline from April to July. In October, the monthly increase in the crude goods index was led by a 1.9-percent rise in prices for crude foodstuffs and feedstuffs. Also contributing to the advance, the index for crude energy materials moved up 1.3 percent. By contrast, prices for crude nonfood materials less energy fell 1.4 percent. (See table B.)

Crude foods: The index for crude foodstuffs and feedstuffs increased 1.9 percent in October. From July to October, prices for crude foodstuffs and feedstuffs moved up 8.3 percent, compared with a 1.3-percent advance for the 3 months ended in July. Leading the monthly rise in October, the index for slaughter hogs surged 27.7 percent. Higher prices for raw milk and slaughter chickens also were major factors in the increase in the crude foodstuffs and feedstuffs index. (See table 2.)

Crude energy: The index for crude energy materials moved up 1.3 percent in October. For the 3 months ended in October, prices for crude energy materials jumped 16.0 percent after falling 9.6 percent from April to July. In October, most of the monthly advance can be traced to the index for natural gas, which climbed 9.5 percent. Higher prices for coal also contributed to the rise in the crude energy materials index.

Crude core: The index for crude nonfood materials less energy fell 1.4 percent in October. From July to October, prices for crude nonfood materials less energy advanced 2.4 percent following a 6.2-percent decrease for the 3 months ended in July. In October, most of the monthly decline is attributable to a 12.0-percent drop in prices for carbon steel scrap.

Services Analysis

Trade industries: The Producer Price Index for the net output of total trade industries moved up 1.5 percent in October, the largest increase since a 1.6-percent advance in August 2011. (Trade indexes measure changes in margins received by wholesalers and retailers.) One-third of the October rise can be attributed to the index for merchant wholesalers of nondurable goods, which climbed 2.4 percent. Higher margins received by gasoline stations with convenience stores and department stores also were factors in the increase in the total trade industries index.

Transportation and warehousing industries: The Producer Price Index for the net output of transportation and warehousing industries climbed 1.0 percent in October, the largest increase since a 1.0-percent rise in March 2012. Accounting for over half of the October advance, the index for the air transportation industry group moved up 2.8 percent. Higher prices received by couriers and messengers and by line-haul railroads also contributed to the increase 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 October subsequent to a 0.2-percent decrease in the prior month. The index for general medical and surgical hospitals led the October increase, climbing 0.9 percent. Higher prices received by portfolio managers and by non-casino hotels and motels also were factors in the advance in the total traditional service industries index.

Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 15, 2013

Each year with the release of PPI data for January, seasonal adjustment factors are recalculated to reflect price movements from the just-completed calendar year. The following information will be available on February 15, 2013 (2 workdays prior to the release of PPI data for January 2013 on February 20):

* Direct seasonal factors for commodity indexes for the year 2013,

* Recalculated seasonal factors for the last 5 years (2008-2012) for the commodity indexes,

* Recalculated seasonal factors for the last 5 years (2008-2012) for the stage-of-processing indexes,

* Recalculated seasonal data for the last 5 years (2008 - 2012) for stage-of-processing and commodity indexes.

In addition, December 2012 relative importance figures also will be available on February 15, 2013.

To obtain this information, visit the PPI website at www.bls.gov/ppi or call the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at (202) 691-7705.