May 2018 Producer Price Index

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The Producer Price Index for final demand rose 0.5 percent in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.1 percent in April and 0.3 percent in March. (See table A.) On an unadjusted basis, the final demand index moved up 3.1 percent for the 12 months ended in May, the largest 12-month increase since climbing 3.1 percent in January 2012.

In May, 60 percent of the rise in the index for final demand is attributable to a 1.0-percent advance 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 edged up 0.1 percent in May, the same as in April. For the 12 months ended in May, the index for final demand less foods, energy, and trade services climbed 2.6 percent.

Final Demand

Final demand goods: The index for final demand goods moved up 1.0 percent in May, the largest advance since a 1.1-percent rise in May 2015. In May 2018, over 80 percent of the broad-based increase in prices for final demand goods can be traced to the index for final demand energy, which jumped 4.6 percent. Prices for final demand goods less foods and energy and for final demand foods rose 0.3 percent and 0.1 percent, respectively.

Product detail: Half of the advance in the index for final demand goods is attributable to a 9.8- percent increase in gasoline prices. The indexes for jet fuel, fresh and dry vegetables, diesel fuel, beef and veal, and light motor trucks also moved higher. In contrast, prices for chicken eggs fell 31.2 percent. The indexes for residential natural gas and for plastic resins and materials also decreased. (See table 4.)

Final demand services: Prices for final demand services moved up 0.3 percent in May, the fifth consecutive rise. In May, 80 percent of the advance in the index for final demand services can be traced to margins for final demand trade services, which climbed 0.9 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services increased 0.7 percent. The index for final demand services less trade, transportation, and warehousing was unchanged.

Product detail: One-third of the May advance in prices for final demand services is attributable to a 1.5-percent rise in margins for machinery, equipment, parts, and supplies wholesaling. The indexes for chemicals and allied products wholesaling; outpatient care (partial); apparel, footwear, and accessories retailing; food retailing; and truck transportation of freight also moved higher. Conversely, prices for guestroom rental fell 4.4 percent. The indexes for fuels and lubricants retailing and for hospital inpatient care also moved lower.

Intermediate Demand by Commodity Type

Within intermediate demand in May, prices for processed goods advanced 1.5 percent, the index for unprocessed goods rose 2.5 percent, and prices for services moved up 0.3 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand increased 1.5 percent in May, the largest rise since climbing 1.5 percent in February 2011. In May, 60 percent of the broad-based advance can be traced to prices for processed energy goods, which jumped 4.6 percent. The index for processed materials less foods and energy increased 0.8 percent, and prices for processed foods and feeds moved up 0.2 percent. For the 12 months ended in May, the index for processed goods for intermediate demand climbed 6.3 percent, the largest 12- month rise since a 7.2-percent advance in November 2011.

Product detail: In May, a major factor in the increase in prices for processed goods for intermediate demand was the index for diesel fuel, which jumped 6.5 percent. Prices for gasoline, steel mill products, jet fuel, commercial electric power, and beef and veal also moved higher. In contrast, the index for processed eggs fell 19.2 percent. Prices for plastic resins and materials and for processed poultry also decreased. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand advanced 2.5 percent in May, the largest rise since moving up 2.6 percent in November 2017. In May, the increase is attributable to prices for unprocessed energy materials, which climbed 6.3 percent. Conversely, the indexes for unprocessed foodstuffs and feedstuffs and for unprocessed nonfood materials less energy both edged down 0.1 percent. For the 12 months ended in May, the index for unprocessed goods for intermediate demand advanced 6.8 percent.

Product detail: Nearly three-quarters of the May increase in the index for unprocessed goods for intermediate demand is attributable to prices for crude petroleum, which jumped 8.4 percent. The indexes for natural gas, slaughter hogs, raw milk, slaughter poultry, and aluminum base scrap also advanced. In contrast, prices for slaughter cattle fell 3.9 percent. The indexes for hay, hayseeds, and oilseeds and corrugated wastepaper also declined.

Services for intermediate demand: The index for services for intermediate demand increased 0.3 percent in May, the same as in both March and April. In May, half of the broad-based advance can be traced to margins for trade services for intermediate demand, which moved up 0.9 percent. Prices for services less trade, transportation, and warehousing for intermediate demand and for transportation and warehousing services for intermediate demand climbed 0.1 percent and 0.4 percent, respectively. For the 12 months ended in May, the index for services for intermediate demand increased 3.3 percent.

Product detail: Nearly 40 percent of the May advance in prices for services for intermediate demand is attributable to a 5.5-percent rise in margins for chemicals and allied products wholesaling. The indexes for business loans (partial); metals, minerals, and ores wholesaling; machinery and equipment parts and supplies wholesaling; insurance; and courier, messenger, and U.S. postal services also moved higher. Conversely, prices for co-employment staffing services fell 2.0 percent. The indexes for accounting services (partial) and for paper and plastics products wholesaling also decreased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand increased 0.7 percent in May, the tenth consecutive advance. In May, the index for total goods inputs to stage 4 intermediate demand rose 0.9 percent, and prices for total services inputs moved up 0.4 percent. (See table D.) Increases in the indexes for diesel fuel; chemicals and allied products wholesaling; machinery and equipment parts and supplies wholesaling; gasoline; metals, minerals, and ores wholesaling; and business loans (partial) outweighed declines in the indexes for finfish and shellfish, legal services, and paper and plastics products wholesaling. (See table 6.) For the 12 months ended in May, prices for stage 4 intermediate demand climbed 3.9 percent, the largest 12-month advance since a 4.1- percent rise in November 2011.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand advanced 1.3 percent in May, the largest rise since climbing 1.3 percent in May 2015. In May 2018, the index for total goods inputs to stage 3 intermediate demand increased 2.3 percent, and prices for total services inputs moved up 0.3 percent. Advances in the indexes for gasoline, slaughter hogs, raw milk, steel mill products, diesel fuel, and chemicals and allied products wholesaling outweighed declines in the indexes for slaughter cattle, ungraded chicken eggs, and paper and plastics products wholesaling. For the 12 months ended in May, prices for stage 3 intermediate demand moved up 5.3 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand increased 1.2 percent in May, the largest rise since a 1.4-percent advance in April 2017. In May, prices for total goods inputs to stage 2 intermediate demand jumped 3.2 percent. In contrast, the index for total services inputs fell 0.2 percent. Higher prices for crude petroleum, gas fuels, steel mill products, paperboard, temporary help services, and nonferrous mill shapes outweighed declines in the indexes for co-employment staffing services; hay, hayseeds, and oilseeds; and accounting services (partial). For the 12 months ended in May, prices for stage 2 intermediate demand rose 5.7 percent.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand moved up 1.2 percent in May, the largest rise since a 1.4-percent increase in December 2016. In May, the index for total goods inputs to stage 1 intermediate demand climbed 1.7 percent, and prices for total services inputs advanced 0.8 percent. Increases in the indexes for diesel fuel; chemicals and allied products wholesaling; gasoline; metals, minerals, and ores wholesaling; crude petroleum; and business loans (partial) outweighed decreases in the indexes for corrugated wastepaper, guestroom rental, and paper and plastics products wholesaling. For the 12 months ended in May, prices for stage 1 intermediate demand rose 6.9 percent, the largest 12-month advance since climbing 7.0 percent in February 2017.