June 2014 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 final demand rose 0.4 percent in June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed a 0.2-percent decline in May and a 0.6-percent advance in April. On an unadjusted basis, the index for final demand moved up 1.9 percent for the 12 months ended in June. (See table A.)

In June, the 0.4-percent increase in final demand prices can be traced to a 0.5-percent advance in the index for final demand goods and a 0.3-percent rise in prices for final demand services.

Within intermediate demand, prices for processed goods advanced 0.4 percent, the index for unprocessed goods fell 0.9 percent, and prices for services moved up 0.6 percent. (See tables B and C.)

Final Demand

(Final demand includes goods, services, and construction which are sold for personal consumption, capital investment, government purchases, and export. See table 4 for product detail.)

Final demand goods: The index for final demand goods increased 0.5 percent in June compared with a 0.2-percent decrease in May. Nearly 90 percent of the advance can be traced to prices for final demand energy, which climbed 2.1 percent in June. The index for final demand goods less foods and energy edged up 0.1 percent. In contrast, the index for final demand foods declined 0.2 percent.

Product detail: In June, a 6.4-percent advance in gasoline prices accounted for most of the increase in the final demand goods index. Prices for residential electric power, pharmaceutical preparations, meats, fresh and dry vegetables, and soft-cake bakery products also rose. Conversely, the index for grains dropped 12.5 percent in June. Prices for residential natural gas and light motor trucks also declined. (See table 4.)

Final demand services: Prices for final demand services increased 0.3 percent in June subsequent to a 0.2-percent decline a month earlier. Nearly two-thirds of the broad-based advance is attributable to the index for final demand services less trade, transportation, and warehousing, which moved up 0.3 percent. Prices for final demand trade services rose 0.2 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) The index for final demand transportation and warehousing services increased 0.3 percent.

Product detail: In June, a 5.9-percent jump in the index for services related to securities brokerage and dealing led the advance in prices for final demand services. The indexes for traveler accommodation services, deposit services (partial), food and alcohol wholesaling, chemical and allied products wholesaling, and airline passenger services also moved higher. In contrast, margins for machinery and equipment wholesaling declined 0.4 percent in June. The indexes for health, beauty, and optical goods retailing and for residential real estate loans (partial) also decreased.

Special grouping, Final demand less foods, energy, and trade: Prices for final demand less foods, energy, and trade services rose 0.2 percent in June compared with no change in May and a 0.3- percent advance in April. (The index for final demand less foods, energy, and trade services represents about two-thirds of final demand.)

Special grouping, Finished goods: Prices for finished goods increased 0.7 percent in June after edging down 0.1 percent in the prior month. (The finished goods index represents about two-thirds of final demand goods, through the exclusion of the weight for government purchases and exports. The finished goods index represents about one-quarter of overall final demand.) Nearly three-quarters of this broad-based advance can be traced to prices for finished consumer energy goods, which jumped 2.3 percent. The indexes for finished goods less foods and energy and for finished consumer foods moved up 0.2 percent and 0.4 percent, respectively. Within finished goods, rising prices for gasoline, residential electric power, pharmaceutical preparations, meats, fresh and dry vegetables, and soft- cake bakery products outweighed falling prices for residential natural gas; natural, processed, and imitation cheese; and light motor trucks.

Intermediate Demand (Intermediate demand includes goods, services, and maintenance and repair construction sold to businesses, excluding capital investment. BLS publishes two parallel treatments of intermediate demand, each constructed from the identical set of commodity price indexes. The first treatment organizes commodities according to commodity type, and the second organizes commodities using a stage-based, production flow model. See the technical note for more information.)

Intermediate Demand by Commodity Type

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved up 0.4 percent in June following a 0.1-percent decrease in May. In June, prices for processed energy goods rose 1.3 percent, and the index for processed materials less foods and energy inched up 0.1 percent. Conversely, prices for processed foods and feeds edged down 0.1 percent. For the 12 months ended in June, prices for processed goods for intermediate demand advanced 1.5 percent. (See table B.)

Product detail: In June, a 1.0-percent increase in commercial electric power prices was a major factor in the rise in the index for processed goods for intermediate demand. The indexes for gasoline, meats, basic organic chemicals, cold rolled steel sheet and strip, and natural gas to electric utilities also advanced. In contrast, prices for natural, processed, and imitation cheese moved down 4.8 percent in June. The indexes for plastic resins and materials and for industrial electric power also declined. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand fell 0.9 percent in June, the largest decline since a 1.7-percent drop in November 2013. The June decrease was led by prices for unprocessed foodstuffs and feedstuffs, which moved down 3.0 percent. The index for unprocessed nonfood materials less energy fell 1.1 percent. Conversely, prices for unprocessed energy materials increased 1.2 percent. For the 12 months ended in June, the index for unprocessed goods for intermediate demand moved up 3.9 percent.

Product detail: In June, prices for grains dropped 12.5 percent. The indexes for raw milk, natural gas, carbon steel scrap, slaughter poultry, and unprocessed finfish also declined. In contrast, prices for crude petroleum rose 3.2 percent. The indexes for slaughter cattle and nonferrous scrap also increased.

Services for intermediate demand: The index for services for intermediate demand climbed 0.6 percent in June, the largest advance since a 0.7-percent rise in October 2012. Nearly 60 percent of the June increase can be traced to prices for services less trade, transportation, and warehousing for intermediate demand, which moved up 0.5 percent. A 1.3-percent jump in the index for trade services for intermediate demand and a 0.3-percent rise in prices for transportation and warehousing services for intermediate demand also contributed to the advance. For the 12 months ended in June, the index for services for intermediate demand increased 1.5 percent. (See table C.)

Product detail: In June, a 3.2-percent advance in the index for deposit services (partial) was a major factor in the rise in prices for services for intermediate demand. The indexes for services related to securities brokerage and dealing, machinery and equipment parts and supplies wholesaling, nonresidential real estate services, accounting services (partial), and traveler accommodation services also increased. Conversely, prices for passenger car rental fell 1.9 percent in June. The indexes for services related to air transportation and for automotive fuels and lubricants retailing also decreased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand (The stage 4 intermediate demand index measures price changes for products purchased by industries that primarily produce output sold to final demand.): The index for stage 4 intermediate demand climbed 0.5 percent in June, the largest advance since a 0.6-percent increase in September 2012. In June, prices for total services inputs to stage 4 intermediate demand rose 0.6 percent, and the index for total goods inputs moved up 0.3 percent. (See table D.) Increases in the indexes for machinery and equipment parts and supplies wholesaling, gasoline, services related to securities brokerage and dealing, commercial electric power, deposit services (partial), and nonresidential real estate rents outweighed decreasing prices for grains; natural, processed, and imitation cheese; and securities brokerage, dealing, and investment advice. (See table 6.) For the 12 months ended in June, the index for stage 4 intermediate demand rose 1.5 percent.

Stage 3 intermediate demand (The stage 3 intermediate demand index measures price changes for products purchased by industries that primarily produce output sold to industries classified in stage 4.): Prices for stage 3 intermediate demand inched up 0.1 percent in June after decreasing 0.3 percent in May. In June, the index for total services inputs to stage 3 intermediate demand rose 0.3 percent, and the index for total goods inputs was unchanged. Higher prices for accounting services (partial), gasoline, slaughter cattle, deposit services (partial), and cold rolled steel sheet and strip outweighed lower prices for raw milk, grains, slaughter poultry, and unprocessed finfish. For the 12 months ended in June, the index for stage 3 intermediate demand climbed 2.8 percent, the smallest advance since a 1.4-percent increase in February 2014.

Stage 2 intermediate demand (The stage 2 intermediate demand index measures price changes for products purchased by industries that primarily produce output sold to industries classified in stage 3.): The index for stage 2 intermediate demand moved up 0.4 percent in June following a 0.3-percent increase in May. In June, prices for total services inputs to stage 2 intermediate demand climbed 0.6 percent, and the index for total goods inputs rose 0.3 percent. Advances in the indexes for deposit services (partial), crude petroleum, machinery and equipment parts and supplies wholesaling, gasoline, services related to securities brokerage and dealing, and chemicals and allied products wholesaling outweighed declines for grains, natural gas, and automotive fuels and lubricants retailing. For the 12 months ended in June, the index for stage 2 intermediate demand moved up 1.7 percent.

Stage 1 intermediate demand (The stage 1 intermediate demand index measures price changes for products purchased by industries that primarily produce output sold to industries classified in stage 2.): The index for stage 1 intermediate demand increased 0.5 percent in June, following 3 consecutive declines. In June, prices for total services inputs to stage 1 intermediate demand rose 0.6 percent, and the index for total goods inputs moved up 0.4 percent. Advances in the indexes for services related to securities brokerage and dealing, gasoline, commercial electric power, nonferrous scrap, traveler accommodation services, and basic organic chemicals outweighed falling prices for carbon steel scrap; industrial natural gas; and securities brokerage, dealing, and investment advice. For the 12 months ended in June, the index for stage 1 intermediate demand rose 1.9 percent.