December 2012 Producer Price Index

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The Producer Price Index for finished goods declined 0.2 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Prices for finished goods fell 0.8 percent in November and 0.2 percent in October. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 0.3 percent, and the crude goods index increased 2.5 percent. On an unadjusted basis, the finished goods index rose 1.3 percent in 2012, compared with a 4.7-percent advance in 2011. (See table A.)

Stage-of-Processing Analysis

Finished goods

In December, most of the decline in the finished goods index can be traced to a 0.9-percent decrease in prices for finished consumer foods. The index for finished energy goods fell 0.3 percent. By contrast, prices for finished goods less foods and energy inched up 0.1 percent.

Finished foods: Prices for finished consumer foods fell 0.9 percent in December, the first decrease since a 0.4-percent decline in May 2012. Over one-third of the December decrease can be traced to the index for beef and veal, which moved down 4.8 percent. Lower prices for fresh and dry vegetables and for natural, processed, and imitation cheese also were factors in the decline in the finished consumer foods index. (See table 2.)

Finished energy: The index for finished energy goods moved down 0.3 percent in December, the third straight decrease. Leading the December decline, gasoline prices fell 1.7 percent. Lower prices for liquefied petroleum gas also contributed to the decrease in the finished energy goods index.

Finished core: The index for finished goods less foods and energy edged up 0.1 percent in December, the same rate as in November. Leading the December advance, cigarette prices increased 2.0 percent.

Intermediate goods

The Producer Price Index for intermediate materials, supplies, and components moved up 0.3 percent in December after falling 1.2 percent in November. Accounting for two-thirds of this increase, the index for intermediate energy goods rose 0.9 percent. Prices for intermediate materials less foods and energy advanced 0.2 percent. By contrast, the index for intermediate foods and feeds declined 0.9 percent. In 2012, prices for intermediate materials, supplies, and components moved up 0.3 percent after rising 5.7 percent in 2011. (See table B.)

Intermediate energy: Prices for intermediate energy goods increased 0.9 percent in December following two consecutive decreases. Leading this rise, the index for diesel fuel climbed 7.1 percent. Higher prices for electric power and industrial natural gas also contributed to the advance in the intermediate energy goods index. (See table 2.)

Intermediate core: The index for intermediate materials less foods and energy rose 0.2 percent in December following a 0.1-percent decline in November. Nearly forty percent of this increase can be attributed to a 2.1-percent advance in prices for primary basic organic chemicals. A rise in the index for basic inorganic chemicals also contributed to higher intermediate core prices.

Intermediate foods: Prices for intermediate foods and feeds moved down 0.9 percent in December, the largest decrease since a 1.1-percent drop in October 2011. A major factor in the December decline was the index for natural, processed, and imitation cheese, which fell 3.4 percent. Lower prices for beef and veal also contributed to the decrease in the index for intermediate foods and feeds.

Crude goods

The Producer Price Index for crude materials for further processing rose 2.5 percent in December. For the 3 months ended in December, prices moved up 3.5 percent compared with a 10.9-percent jump from June to September. The December monthly advance is mostly attributable to the index for crude energy materials, which climbed 7.2 percent. Prices for crude nonfood materials less energy increased 1.1 percent. By contrast, the crude foodstuffs and feedstuffs index fell 1.1 percent.

Crude energy: Prices for crude energy materials advanced 7.2 percent in December. From September to December, the crude energy index increased 7.9 percent following a 15.1-percent surge in the previous 3-month period. Over seventy percent of the December monthly rise can be traced to a 9.4-percent jump in crude petroleum prices. Advances in the indexes for natural gas and coal also contributed to higher prices for crude energy materials. (See table 2.)

Crude core: The index for crude nonfood materials less energy moved up 1.1 percent in December. In the fourth quarter, the crude core index rose 0.7 percent subsequent to a 3.6- percent increase from June to September. More than half of the December monthly advance can be attributed to a 4.2-percent jump in nonferrous scrap prices. Higher prices for iron and steel scrap also were a factor in the rise in the crude core index.

Crude foods: Prices for crude foodstuffs and feedstuffs declined 1.1 percent in December. From September to December, the crude foods index moved up 1.4 percent compared with an 11.7-percent jump for the 3 months ended in September. Over half of the monthly decrease in December can be traced to raw milk prices, which fell 4.0 percent.

Services Analysis

Trade industries: The Producer Price Index for the net output of total trade industries inched down 0.1 percent in December following three consecutive increases. (Trade indexes measure changes in margins received by wholesalers and retailers.) Leading the December decline were margins received by electronic shopping and mail-order houses, which fell 4.8 percent. Lower margins received by merchant wholesalers of nondurable goods and by warehouse clubs and supercenters also were factors in the decrease in the total trade industries index. In 2012, the total trade industries index rose 4.0 percent.

Transportation and warehousing industries: The Producer Price Index for the net output of transportation and warehousing industries moved up 0.2 percent in December following a 0.3- percent decline in November. Most of this rise can be traced to prices for scheduled passenger air transportation, which climbed 1.5 percent. Higher prices received by the industries for nonscheduled air passenger chartering and freight transportation arrangement also contributed to the increase in the transportation and warehousing industries index. In 2012, the transportation and warehousing industries index moved up 2.6 percent.

Traditional service industries: The Producer Price Index for the net output of total traditional service industries moved down 0.3 percent in December following a 0.4-percent advance in November. A 2.3-percent decline in the index for the commercial banking industry accounted for over half of the December decrease. Lower prices received by the industries for investment banking and securities dealing and for non-casino hotels and motels also were factors in the decline in the total traditional service industries index. In 2012, the total traditional service industries index increased 1.3 percent.

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. Having been in publication for over three years, the wherever-provided services indexes will now be included in this annual process. 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.