January 2017 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 increased 0.6 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.2 percent in December and 0.5 percent in November. (See table A.) On an unadjusted basis, the final demand index climbed 1.6 percent for the 12 months ended January 2017.

In January, over 60 percent of the advance in the final demand index is attributable to a 1.0- percent increase in prices for final demand goods. The index for final demand services moved up 0.3 percent.

Prices for final demand less foods, energy, and trade services rose 0.2 percent in January after inching up 0.1 percent in December. For the 12 months ended in January, the index for final demand less foods, energy, and trade services climbed 1.6 percent.

Final Demand

Final demand goods: Prices for final demand goods moved up 1.0 percent in January, the largest rise since a 1.0-percent advance in May 2015. Three-fourths of the January increase can be traced to the index for final demand energy, which jumped 4.7 percent. Prices for final demand goods less foods and energy climbed 0.4 percent. The index for final demand foods was unchanged.

Product detail: Over half of the January increase in prices for final demand goods is attributable to the gasoline index, which advanced 12.9 percent. The indexes for pharmaceutical preparations, iron and steel scrap, home heating oil, residential natural gas, and pork also moved higher. In contrast, prices for beef and veal fell 7.2 percent. The indexes for light motor trucks and for candy and nuts also decreased. (See table 4.)

Final demand services: The index for final demand services rose 0.3 percent in January after edging up 0.1 percent in December. Over 80 percent of the January increase can be traced to margins for final demand trade services, which advanced 0.9 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) The index for final demand transportation and warehousing services climbed 1.1 percent. Conversely, prices for final demand services less trade, transportation, and warehousing inched down 0.1 percent.

Product detail: Nearly half of the January increase in the index for final demand services can be attributed to margins for apparel, jewelry, footwear, and accessories retailing, which advanced 4.8 percent. The indexes for fuels and lubricants retailing, loan services (partial), airline passenger services, food and alcohol retailing, and services related to securities brokerage and dealing also moved higher. In contrast, prices for guestroom rental fell 3.3 percent. The indexes for apparel wholesaling and bundled wired telecommunications access services also decreased.

Intermediate Demand by Commodity Type

Within intermediate demand in January, prices for processed goods advanced 1.1 percent, the index for unprocessed goods rose 3.8 percent, and prices for services climbed 0.3 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved up 1.1 percent in January, the largest increase since a similar 1.1-percent rise in February 2013. Over three-fourths of the January advance is attributable to a 4.9-percent rise in prices for processed energy goods. The indexes for processed materials less foods and energy and for processed foods and feeds increased 0.3 percent and 0.5 percent, respectively. For the 12 months ended in January, prices for processed goods for intermediate demand climbed 3.8 percent, the largest rise since a 4.3-percent advance in the 12 months ended January 2012.

Product detail: A major factor in the January advance in the index for processed goods for intermediate demand was prices for industrial electric power, which increased 7.7 percent. The indexes for gasoline, utility natural gas, basic organic chemicals, diesel fuel, and pork also moved higher. Conversely, prices for beef and veal dropped 7.2 percent. The indexes for commercial electric power and for thermoplastic resins and plastics materials also decreased. (See table 5.)

Unprocessed goods for intermediate demand: Prices for unprocessed goods for intermediate demand rose 3.8 percent in January following an 8.4-percent jump in December. In January, about 60 percent of the broad-based increase is attributable to a 6.7-percent advance in the index for unprocessed energy materials. Prices for unprocessed foodstuffs and feedstuffs and for unprocessed nonfood materials less energy also moved higher, rising 2.2 percent and 3.2 percent, respectively. For the 12 months ended in January, the index for unprocessed goods for intermediate demand increased 17.6 percent, the largest 12-month advance since a 20.0-percent rise in September 2011.

Product detail: Two-thirds of the January increase in the index for unprocessed goods for intermediate demand can be traced to prices for natural gas, which rose 23.6 percent. The indexes for iron and steel scrap, coal, slaughter hogs, raw milk, and slaughter steers and heifers also rose. In contrast, prices for crude petroleum fell 5.5 percent. The indexes for slaughter poultry and gold ores also declined.

Services for intermediate demand: The index for services for intermediate demand advanced 0.3 percent in January, the fourth consecutive increase. The January rise can be traced to prices for services less trade, transportation, and warehousing for intermediate demand, which moved up 0.4 percent. Conversely, margins for trade services for intermediate demand and the index for transportation and warehousing services for intermediate demand both decreased 0.2 percent. For the 12 months ended in January, prices for services for intermediate demand advanced 1.5 percent.

Product detail: Most of the increase in the index for services for intermediate demand can be attributed to prices for business loans (partial), which rose 5.5 percent. The indexes for services related to securities brokerage and dealing, portfolio management, airline passenger services, fuels and lubricants retailing, and legal services also increased. In contrast, margins for building materials, paint, and hardware wholesaling fell 3.2 percent. Prices for advertising space in periodicals and newspapers and for ground courier and messenger services also moved lower.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand increased 0.5 percent in January, the fifth consecutive rise. In January, prices for total goods inputs to stage 4 intermediate demand moved up 0.7 percent, and the index for total services inputs advanced 0.4 percent. (See table D.) Increases in prices for industrial electric power, business loans (partial), gasoline, portfolio management, services related to securities brokerage and dealing, and diesel fuel outweighed decreases in the indexes for building materials, paint, and hardware wholesaling; beef and veal; and motor vehicle parts. For the 12 months ended in January, prices for stage 4 intermediate demand rose 1.8 percent, the largest increase since a 1.8-percent advance in the 12 months ended February 2013.

Stage 3 intermediate demand: The index for stage 3 intermediate demand moved up 0.9 percent in January, the third consecutive increase. In January, prices for total goods inputs to stage 3 intermediate demand advanced 1.8 percent. Conversely, the index for total services inputs moved down 0.2 percent. Increases in prices for gasoline, slaughter hogs, raw milk, business loans (partial), services related to securities brokerage and dealing, and slaughter steers and heifers outweighed declines in the indexes for advertising space sales in periodicals and newspapers, ground courier and messenger services, and slaughter poultry. For the 12 months ended in January, prices for stage 3 intermediate demand rose 2.5 percent, the largest advance since a 2.8-percent increase in October 2014.

Stage 2 intermediate demand: The index for stage 2 intermediate demand increased 1.2 percent in January following a 2.2-percent rise in December. In January, prices for total goods inputs to stage 2 intermediate demand advanced 2.2 percent, and the index for total services inputs moved up 0.4 percent. Higher prices for natural gas; services related to securities brokerage and dealing; coal; portfolio management; airline passenger services; and hay, hayseeds, and oilseeds outweighed declines in the indexes for crude petroleum, ground courier and messenger services, and thermoplastic resins and plastics materials. For the 12 months ended in January, the index for stage 2 intermediate demand advanced 7.9 percent, the largest rise since an 8.0-percent increase in November 2011.

Stage 1 intermediate demand: The index for stage 1 intermediate demand advanced 1.5 percent in January, the fifth consecutive rise. In January, prices for total goods inputs to stage 1 intermediate demand moved up 2.3 percent, and the index for total services inputs increased 0.4 percent. Higher prices for iron and steel scrap, basic organic chemicals, business loans (partial), diesel fuel, gasoline, and natural gas outweighed declines in the indexes for passenger car rental; building materials, paint, and hardware wholesaling; and crude petroleum. For the 12 months ended in January, the index for stage 1 intermediate demand advanced 5.6 percent, the largest rise since a 5.7-percent increase in the 12 months ended November 2011.

Recalculation of Seasonal Adjustment Factors

Effective with this release, seasonal adjustment factors have been recalculated to reflect price- movement patterns during 2016 for the Final Demand-Intermediate Demand (FD-ID) System and commodity-grouping indexes. This routine annual recalculation may affect previously published seasonally adjusted indexes and percent changes for January 2012 through December 2016.

Revised seasonally adjusted data for this period, as well as seasonal adjustment factors for directly adjusted commodity indexes to be used through December 2017, were released February 10, 2017. To obtain this information, contact the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691-7705, or visit the Producer Price Index homepage at https://www.bls.gov/ppi.

Tables E and F below provide monthly seasonally adjusted percent changes for major FD-ID system indexes in 2016, based on former and recalculated seasonal factors. These percent changes include final price data through August 2016 and may differ from values shown in tables A through D of this release, which include final price data through September 2016.