December 2015 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 0.2 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices increased 0.3 percent in November and fell 0.4 percent in October. On an unadjusted basis, the final demand index fell 1.0 percent in 2015, after rising 0.9 percent in 2014. (See table A.)

In December, the decrease in the final demand index can be traced to a 0.7-percent decline in prices for final demand goods. In contrast, the index for final demand services moved up 0.1 percent.

Within intermediate demand, the index for processed goods fell 1.0 percent, prices for unprocessed goods dropped 3.0 percent, and the index for services rose 0.2 percent. (See tables B and C.)

Final Demand

Final demand goods: The index for final demand goods moved down 0.7 percent in December, the sixth consecutive decrease. Over three-quarters of the December decline can be traced to prices for final demand energy, which fell 3.4 percent. The index for final demand foods decreased 1.3 percent. Conversely, prices for final demand goods less foods and energy inched up 0.1 percent.

Product detail: About half of the December drop in the index for final demand goods is attributable to prices for gasoline, which fell 8.3 percent. The indexes for meats, diesel fuel, chicken eggs, jet fuel, and fresh fruits and melons also moved lower. In contrast, prices for pharmaceutical preparations rose 1.1 percent. The indexes for fresh and dry vegetables and for home heating oil also increased. (See table 4.)

Final demand services: The index for final demand services inched up 0.1 percent in December following a 0.5-percent advance in November. The December increase can be traced to prices for final demand services less trade, transportation, and warehousing, which climbed 0.4 percent. Conversely, the indexes for final demand trade services and for final demand transportation and warehousing services both declined 0.4 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: Leading the December advance in the index for final demand services, prices for services related to securities brokerage and dealing jumped 30.3 percent. The indexes for machinery, equipment, parts, and supplies wholesaling; physician care; food retailing; and hospital inpatient care also moved higher. In contrast, margins for apparel, jewelry, footwear, and accessories retailing fell 3.4 percent. The indexes for loan services (partial); TV, video, and photographic equipment and supplies retailing; and airline passenger services also fell.

Special grouping, Final demand less foods, energy, and trade: The index for final demand less foods, energy, and trade services edged up 0.2 percent in December. In 2015, prices for final demand less foods, energy, and trade services advanced 0.3 percent after rising 1.3 percent in 2014.

Intermediate Demand by Commodity Type

Processed goods for intermediate demand: Prices for processed goods for intermediate demand fell 1.0 percent in December, the sixth consecutive decline. In December, 60 percent of the broad-based decrease can be traced to the index for processed energy goods, which dropped 3.5 percent. Prices for processed materials less foods and energy and for processed foods and feeds also moved down, falling 0.3 percent and 2.4 percent, respectively. In 2015, the index for processed goods for intermediate demand decreased 6.4 percent compared with a 2.6-percent decline in 2014. (See table B.)

Product detail: Almost half of the December decrease in the index for processed goods for intermediate demand is attributable to diesel fuel prices, which fell 23.4 percent. The indexes for gasoline, meats, processed eggs, jet fuel, and hot rolled steel sheet and strip also moved lower. Conversely, prices for commercial electric power advanced 0.7 percent. The indexes for primary basic organic chemicals and fluid milk products also increased. (See table 5.)

Unprocessed goods for intermediate demand: Prices for unprocessed goods for intermediate demand declined 3.0 percent in December after falling 5.1 percent in November. In December, nearly two-thirds of the broad-based decrease can be traced to the index for unprocessed energy goods, which dropped 5.6 percent. Prices for unprocessed foodstuffs and feedstuffs and for unprocessed nonfood materials less energy also moved lower, declining 1.6 percent and 1.0 percent, respectively. In 2015, the index for unprocessed goods for intermediate demand dropped 25.0 percent following an 8.7-percent decrease in 2014.

Product detail: Over three-quarters of the decline in the index for unprocessed goods for intermediate demand can be attributed to prices for crude petroleum, which dropped 16.0 percent. The indexes for slaughter cattle, ungraded chicken eggs, nonferrous metals, strawberries, and unprocessed finfish also fell. In contrast, raw milk prices climbed 8.0 percent. The indexes for natural gas and wastepaper also increased.

Services for intermediate demand: The index for services for intermediate demand advanced 0.2 percent in December following no change in the prior month. In December, the increase in the index for services for intermediate demand can be attributed to prices for services less trade, transportation, and warehousing for intermediate demand, which rose 0.5 percent. Conversely, the index for trade services for intermediate demand decreased 1.1 percent. Prices for transportation and warehousing services for intermediate demand were unchanged. In 2015, prices for services for intermediate demand advanced 0.5 percent after rising 1.8 percent in 2014. (See table C.)

Product detail: In December, prices for television advertising time sales moved up 2.6 percent. The indexes for services related to securities brokerage and dealing; courier, messenger, and U.S. postal services; tax preparation and planning; passenger car rental; and hardware, building materials, and supplies retailing also advanced. In contrast, margins for metals, minerals, and ores wholesaling fell 7.7 percent. The indexes for business loans (partial) and airline passenger services also moved lower.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand declined 0.5 percent in December, the fifth consecutive decrease. In December, prices for total goods inputs to stage 4 intermediate demand fell 0.8 percent, and the index for total services inputs edged down 0.1 percent. (See table D.) Declines in the indexes for diesel fuel; business loans (partial); metals, minerals, and ores wholesaling; meats; gasoline; and food wholesaling outweighed increases in the indexes for services related to securities brokerage and dealing, commercial electric power, and tax preparation and planning. (See table 6.) In 2015, prices for stage 4 intermediate demand decreased 1.5 percent following a 0.5-percent advance in 2014.

Stage 3 intermediate demand: The index for stage 3 intermediate demand fell 0.7 percent in December, the sixth consecutive decrease. In December, prices for total goods inputs to stage 3 intermediate demand declined 1.5 percent. Conversely, the index for total services inputs inched up 0.1 percent. Declines in the indexes for slaughter cattle; gasoline; diesel fuel; ungraded chicken eggs; jet fuel; and metals, minerals, and ores wholesaling outweighed advancing prices for services related to securities brokerage and dealing, raw milk, and slaughter poultry. In 2015, the stage 3 intermediate demand index decreased 6.7 percent after rising 0.2 percent in 2014.

Stage 2 intermediate demand: The index for stage 2 intermediate demand moved down 0.4 percent in December following a 1.3-percent decline in the prior month. In December, prices for total goods inputs to stage 2 intermediate demand fell 2.0 percent. In contrast, the index for total services inputs moved up 0.7 percent. Declines in the indexes for crude petroleum; prepared animal feeds; securities brokerage, dealing, and investment advice; diesel fuel; liquefied petroleum gas; and management, scientific, and technical consulting services outweighed increases in prices for services related to securities brokerage and dealing, natural gas, and television advertising time sales. In 2015, prices for stage 2 intermediate demand fell 7.9 percent following a 6.4-percent decrease in 2014.

Stage 1 intermediate demand: The index for stage 1 intermediate demand decreased 1.2 percent in December, the sixth straight decline. In December, prices for total goods inputs to stage 1 intermediate demand fell 1.8 percent, and the index for total services inputs moved down 0.5 percent. Decreases in the indexes for diesel fuel; metals, minerals, and ores wholesaling; business loans (partial); crude petroleum; gasoline; and ethanol outweighed increases in the indexes for services related to securities brokerage and dealing, primary basic organic chemicals, and corn. In 2015, the stage 1 intermediate demand index fell 8.3 percent after declining 2.4 percent in 2014.

Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 12, 2016

Each year with the release of PPI data for January, seasonal adjustment factors and relative importance figures are recalculated to reflect price movements from the just-completed calendar year. The following seasonal information will be available on February 12, 2016 (2 workdays prior to the release of PPI data for January 2016 on February 17):

* Direct seasonal factors for PPI commodity indexes for the year 2016, * Recalculated seasonal factors for the last 5 years (2011-2015) for PPI commodity indexes, * Recalculated seasonal factors for the last 5 years (2011-2015) for PPI Final Demand- Intermediate Demand indexes, * Recalculated seasonal data for the last 5 years (2011-2015) for Final Demand-Intermediate Demand and commodity indexes. This revision to seasonally adjusted indexes for the previous 5 years will be posted to the PPI database on the BLS website.

In addition, the following relative importance tables as of December 2015 will be available on February 12, 2016:

* Final demand by individual commodities * Final demand by component series * Individual commodities of intermediate demand by commodity type * Component series of intermediate demand by commodity type * Individual commodities of intermediate demand by production flow * Component series of intermediate demand by production flow * Commodities, all levels * Wherever-provided services and construction

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