September 2013 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 fell 0.1 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Prices for finished goods rose 0.3 percent in August and were unchanged in July. At the earlier stages of processing, prices received by producers of intermediate goods advanced 0.1 percent, and the crude goods index increased 0.5 percent. On an unadjusted basis, prices for finished goods moved up 0.3 percent for the 12 months ended September 2013, the lowest 12-month change since a 2.0-percent decline in October 2009. (See table A.)

Stage-of-Processing Analysis

Finished goods

In September, the 0.1-percent decline in the finished goods index is attributable to prices for finished consumer foods, which fell 1.0 percent. By contrast, the indexes for finished energy goods and for finished goods less foods and energy moved up 0.5 percent and 0.1 percent, respectively.

Finished foods: Prices for finished consumer foods fell 1.0 percent in September, the largest decline since a 1.0-percent decrease in April 2013. A 17.9-percent drop in the index for fresh and dry vegetables accounted for two-thirds of the September decline. Lower prices for carbonated soft drinks and processed poultry also contributed to the decrease in the finished consumer foods index. (See table 2.)

Finished energy: The index for finished energy goods advanced 0.5 percent in September following a 0.8-percent rise in August. One-third of the September increase is attributable to a 6.0-percent jump in the index for home heating oil. Higher prices for residential natural gas also were a factor in the advance in the index for finished energy goods.

Finished core: The index for finished goods less foods and energy inched up 0.1 percent in September after no change in the prior month. A 0.6-percent increase in prices for motor vehicles led the advance in the finished core index.

Intermediate goods

The Producer Price Index for intermediate materials, supplies, and components advanced 0.1 percent in September following no change in both August and July. Over half of the rise can be traced to prices for intermediate energy goods, which moved up 0.3 percent. Prices for intermediate materials less foods and energy and for intermediate foods and feeds also increased 0.1 percent and 0.3 percent, respectively. For the 12 months ended in September, the intermediate goods index moved down 0.5 percent, the largest decline since a 1.1-percent decrease for the 12 months ended April 2013. (See table B.)

Intermediate energy: The index for intermediate energy goods rose 0.3 percent in September, the fifth consecutive advance. Leading the September increase, diesel fuel prices climbed 2.9 percent. Higher prices for jet fuel and heating oil also were factors in the rise in the index for intermediate energy goods. (See table 2.)

Intermediate core: The index for intermediate materials less foods and energy inched up 0.1 percent in September after rising 0.2 percent in August. Nearly half of the September advance can be traced to a 1.1-percent jump in prices for thermoplastic resins and materials. Higher lumber prices also contributed to the increase in the index for intermediate materials less foods and energy.

Intermediate foods: Prices for intermediate foods and feeds rose 0.3 percent in September following a 2.3-percent drop in August. The advance was led by the index for soybean cake and meal, which increased 17.6 percent.

Crude goods

The Producer Price Index for crude materials for further processing moved up 0.5 percent in September. For the 3-month period ended in September, prices for crude materials declined 1.0 percent following a 1.5-percent advance from March to June. The September monthly increase can be traced to prices for crude energy materials, which rose 2.0 percent. By contrast, the indexes for crude nonfood materials less energy and for crude foodstuffs and feedstuffs fell 1.0 percent and 0.4 percent, respectively. (See table B.)

Crude energy: The index for crude energy materials rose 2.0 percent in September. From June to September, prices for crude energy materials moved up 3.3 percent subsequent to a 7.9- percent climb for the 3 months ended in June. The broad-based monthly advance in September was led by a 3.3-percent increase in the index for crude petroleum. Higher prices for natural gas and coal also contributed to the rise in the crude energy materials index. (See table 2.)

Crude core: The index for crude nonfood materials less energy moved down 1.0 percent in September. For the 3 months ended in September, crude core prices declined 1.6 percent after falling 4.4 percent from March to June. A major factor in the September monthly decrease was the index for carbon steel scrap, which fell 2.1 percent. Lower prices for corn also contributed to the decline in the crude core index.

Crude foods: The index for crude foodstuffs and feedstuffs fell 0.4 percent in September. From June to September, prices for crude foods moved down 5.6 percent following a 0.8- percent decrease for the 3-month period ended in June. The September monthly decline was primarily the result of a 13.1-percent drop in corn prices.

Services Analysis

Trade industries: The Producer Price Index for the net output of total trade industries moved down 0.6 percent in September, the first decline since a 1.2-percent drop in May 2013. (Trade indexes measure changes in margins received by wholesalers and retailers.) Accounting for eighty-five percent of the September decrease, margins received by merchant wholesalers of nondurable goods fell 1.7 percent. Lower margins received by gasoline stations and women's clothing stores also contributed to 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 down 0.9 percent in September, the largest decline since a 0.9-percent drop in September 2010. Leading the September 2013 decrease, prices received by the industry for scheduled passenger air transportation fell 5.4 percent. Declines in the indexes for Coastal and Great Lakes freight transportation and for freight transportation arrangement also were factors in lower prices received by transportation and warehousing industries.

Services less trade, transportation, and warehousing: The Producer Price Index for the net output of services less trade, transportation, and warehousing fell 0.3 percent in September, the largest decrease since falling 0.3 percent in March 2012. Accounting for over eighty percent of the September decline, prices received by the industry group for securities, commodity contracts, and financial investment activities moved down 1.8 percent. Decreases in the indexes for passenger car rental and for non-casino hotels and motels also contributed to lower prices for services less trade, transportation, and warehousing.

Effect of Government Shutdown on PPI Data

The release of the September Producer Price Index (PPI) data occurs 11 business days later than originally scheduled because of the recent partial Federal government shutdown. Data collection for the estimates in this release had been completed prior to the shutdown, in accordance with our normal schedule. However, data analysis and production of the PPI news release were delayed due to the shutdown.

The shutdown also delayed the transmission of October PPI pricing surveys by about one week. This delay affects the collection, processing, and analysis of October data, and will result in a delay in the October data release by a week. The delay is expected to have no appreciable effect on November PPI data, which will be released as originally scheduled on December 13.

Producer Price Index to Transition from Stage-of-Processing to Final Demand- Intermediate Demand Aggregation System

Effective with the January 2014 PPI data release in February 2014, BLS will transition from the Stage of Processing (SOP) to the Final Demand-Intermediate Demand (FD-ID) aggregation system. This shift will result in significant changes to the PPI news release, as well as other documents available from PPI. The transition to the FD-ID system is the culmination of a long-standing PPI objective to improve the current SOP aggregation system by incorporating PPIs for services, construction, government purchases, and exports. In comparison to the SOP system, the FD-ID system more than doubles current PPI coverage of the United States economy to over 75 percent of in-scope domestic production. The FD-ID system was introduced as a set of experimental indexes in January 2011. Nearly all new FD-ID goods, services, and construction indexes provide historical data back to either November 2009 or April 2010, while the indexes for goods that correspond with the historical SOP indexes go back to the 1970s or earlier.

The FD-ID system will highlight the index for final demand, which measures price changes for goods, services, and construction sold to final demand: personal consumption, capital investment, government purchases, and exports. The composition of products in the final demand price index differs from that of the finished goods index in two major respects. First, it includes government purchases and exports. Second, it includes services and construction, which are not reflected in finished goods.

The FD-ID system also includes two separate parallel treatments of intermediate demand: price changes for goods, services, and construction sold to business as inputs to production. The first treatment, intermediate demand by commodity type, measures price changes based on similarity of product and includes aggregate indexes for processed goods for intermediate demand, unprocessed goods for intermediate demand, and services for intermediate demand.

The second treatment, intermediate demand by production flow, is a stage-based system of price indexes, where price changes for goods, services, and construction can be studied as they move through the production chain of the economy to final demand. This treatment includes four stages of intermediate demand, which were established to maximize forward flow of production through the economy, while minimizing backflow of production.

These FD-ID indexes are constructed using PPI commodity indexes for goods, services, and construction, where products are assigned to various categories according to buyer type and level of fabrication. A product purchased by different classes of buyers is assigned to multiple FD-ID aggregates, with unique weights allocated to each aggregate based on the product's value of shipments to each buyer type.

To assist with the transition to the FD-ID system, PPI will provide, on a monthly basis, a version of the PPI news release based on the FD-ID model, starting with the publication of July 2013 data in August. The document will be labeled "Experimental" through the December release in January 2014 and will be posted to the PPI Experimental Aggregation webpage about two weeks after each month's scheduled PPI release. That webpage, http://www.bls.gov/ppi/experimentalaggregation.htm, also contains detailed methodological information for the FD-ID aggregation system. With the publication of January 2014 data in February 2014, the FD-ID version of the PPI news release will become the official news release document of record.

Further information also is available from the PPI Section of Index Analysis and Public information, at ppi-info@bls.gov or (202) 691-7705.