September 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 decreased 0.1 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices were unchanged in August and advanced 0.1 percent in July. On an unadjusted basis, the index for final demand increased 1.6 percent for the 12 months ended in September. (See table A.)

In September, the 0.1-percent decrease in final demand prices can be traced to the indexes for both goods and services, which moved down 0.2 percent and 0.1 percent, respectively.

Within intermediate demand, prices for processed goods inched up 0.1 percent, the index for unprocessed goods rose 0.6 percent, and prices for services were unchanged. (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 moved down 0.2 percent in September, the second consecutive decrease. The September decline was led by prices for final demand energy, which fell 0.7 percent. The index for final demand foods also decreased 0.7 percent. In contrast, prices for final demand goods less foods and energy advanced 0.2 percent.

Product detail: The decline in prices for final demand goods was led by the index for gasoline, which dropped 2.6 percent. Prices for meats; oilseeds; corn; dry, condensed, and evaporated milk products; and inedible fats and oils also moved lower. Conversely, the index for hair preparations increased 5.7 percent. Prices for natural cheese (except cottage cheese) and residual fuels also advanced. (See table 4.)

Final demand services: The index for final demand services edged down 0.1 percent in September, the first decline since December 2013. Two-thirds of the September decrease can be traced to prices for final demand services less trade, transportation, and warehousing, which fell 0.1 percent. The index for final demand transportation and warehousing services moved down 0.2 percent. Margins for final demand trade services were unchanged. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: Nearly half of the September decline in the index for final demand services can be traced to prices for traveler accommodation services, which dropped 6.9 percent. The indexes for loan services (partial), fuels and lubricants retailing, airline passenger services, and passenger car rental also moved lower. In contrast, margins for machinery and equipment wholesaling advanced 1.1 percent. The indexes for chemicals and allied products wholesaling, food and alcohol retailing, and deposit services (partial) also increased.

Special grouping, Final demand less foods, energy, and trade: The index for final demand less foods, energy, and trade services edged down 0.1 percent in September following three consecutive 0.2-percent increases. For the 12 months ended in September, prices for final demand less foods, energy, and trade services rose 1.7 percent. (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 fell 0.2 percent in September after declining 0.3 percent in August. (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.) The September decrease was led by the index for finished consumer energy goods, which dropped 0.9 percent. Prices for finished consumer foods moved down 0.6 percent. Conversely, the index for finished goods less foods and energy advanced 0.2 percent. Within finished goods, falling prices for gasoline; meats; dry, condensed, and evaporated milk products; soft drinks; residential electric power; and jewelry products outweighed rising prices for hair preparations, natural cheese (except cottage cheese), and residential natural gas.

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 inched up 0.1 percent in September after falling 0.3 percent in August. Leading the advance, prices for processed materials less foods and energy increased 0.2 percent. Contributing to a lesser extent, the index for processed foods and feeds climbed 0.6 percent. In contrast, prices for processed energy goods decreased 0.5 percent. For the 12 months ended in September, the index for processed goods for intermediate demand rose 1.3 percent. (See table B.)

Product detail: In September, a 1.4-percent increase in prices for primary basic organic chemicals was a major contributor to the advance in the index for processed goods for intermediate demand. Prices for soybean cake and meal, plastic resins and materials, natural cheese (except cottage cheese), and jet fuel also moved higher. Conversely, the diesel fuel index declined 1.3 percent in September. Prices for gasoline, meats, and inedible fats and oils also decreased. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand rose 0.6 percent in September following four straight declines. Leading the advance, prices for unprocessed foodstuffs and feedstuffs jumped 2.4 percent. The index for unprocessed nonfood materials less energy moved up 0.5 percent. In contrast, prices for unprocessed energy materials fell 1.1 percent. For the 12 months ended in September, the index for unprocessed goods for intermediate demand decreased 0.2 percent.

Product detail: An 11.4-percent increase in slaughter poultry prices was a major factor in the September advance in the index for unprocessed goods for intermediate demand. Prices for slaughter cattle, natural gas, raw milk, carbon steel scrap, and slaughter barrows and gilts also moved higher. Conversely, the crude petroleum index decreased 3.9 percent in September. Prices for hay, hayseeds, and oilseeds and for nonferrous metal ores also declined.

Services for intermediate demand: The index for services for intermediate demand was unchanged in September following a 0.2-percent advance in August. In September, a 0.2-percent rise in the index for trade services for intermediate demand and a 0.1-percent increase in prices for transportation and warehousing services for intermediate demand offset a 0.2-percent decline in the index for services less trade, transportation, and warehousing for intermediate demand. For the 12 months ended in September, the index for services for intermediate demand advanced 1.5 percent. (See table C.)

Product detail: In September, margins for chemicals and allied products wholesaling moved up 3.0 percent. The indexes for securities brokerage, dealing, investment advice, and related services; portfolio management; deposit services (partial); and ground courier and messenger services also advanced. In contrast, prices for loan services (partial) fell 3.0 percent. The indexes for traveler accommodation services, passenger car rental, fuels and lubricants retailing, and airline passenger services 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 was unchanged in September after no change in the prior month. In September, prices for both total services inputs and total goods inputs to stage 4 intermediate demand inched up 0.1 percent. (See table D.) Higher prices for securities brokerage, dealing, investment advice, and related services; portfolio management; soybean cake and meal; jet fuel; and deposit services (partial) offset declines in the indexes for loan services (partial), gasoline, meats, passenger car rental, and corn. (See table 6.) For the 12 months ended in September, prices for stage 4 intermediate demand advanced 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 advanced 0.4 percent in September after declining 0.7 percent in August. In September, prices for total goods inputs to stage 3 intermediate demand increased 0.9 percent. Conversely, the index for total services inputs fell 0.2 percent. Higher prices for slaughter poultry, raw milk, slaughter livestock, plastic resins and materials, deposit services (partial), and ground courier and messenger services outweighed decreases in prices for loan services (partial), gasoline, and passenger car rental. For the 12 months ended in September, the index for stage 3 intermediate demand rose 3.2 percent.

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 fell 0.3 percent in September, the third consecutive decrease. In September, prices for total goods inputs to stage 2 intermediate demand declined 0.4 percent, and the index for total services inputs inched down 0.1 percent. Lower prices for crude petroleum; loan services (partial); corn; hay, hayseeds, and oilseeds; traveler accommodation services; and wireless telecommunication services outweighed increases in the indexes for natural gas, soybean cake and meal, and chemicals and allied products wholesaling. For the 12 months ended in September, prices for stage 2 intermediate demand fell 2.0 percent, the largest decrease since a 6.2-percent drop in July 2012.

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 moved up 0.2 percent in September after a 0.2-percent decline in August. In September, the index for total services inputs to stage 1 intermediate demand rose 0.2 percent, and prices for total goods inputs inched up 0.1 percent. Increases in the indexes for securities brokerage, dealing, investment advice, and related services; carbon steel scrap; primary basic organic chemicals; portfolio management; chemicals and allied products wholesaling; and soybean cake and meal outweighed decreases in prices for traveler accommodation services, gasoline, and industrial electric power. For the 12 months ended in September, the index for stage 1 intermediate demand advanced 2.1 percent.