July 2018 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 was unchanged in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.3 percent in June and 0.5 percent in May. (See table A.) On an unadjusted basis, the final demand index increased 3.3 percent for the 12 months ended in July.

In July, a 0.1-percent rise in the index for final demand goods offset a 0.1-percent decline in prices for final demand services.

The index for final demand less foods, energy, and trade services moved up 0.3 percent in July, the same as in June. For the 12 months ended in July, prices for final demand less foods, energy, and trade services climbed 2.8 percent.

Final Demand

Final demand goods: The index for final demand goods inched up 0.1 percent in July, the same as in June. The July advance in prices for final demand goods can be traced to a 0.3-percent rise in the index for final demand goods less foods and energy. In contrast, prices for final demand energy fell 0.5 percent, and the index for final demand foods decreased 0.1 percent.

Product detail: In July, a major factor in the increase in prices for final demand goods was the index for pharmaceutical preparations, which rose 0.7 percent. Prices for eggs for fresh use, fresh fruits and melons, motor vehicles, and liquefied petroleum gas also moved higher. Conversely, the electric power index fell 1.6 percent. Prices for meats; hay, hayseeds, and oilseeds; and nonferrous scrap also decreased. (See table 4.)

Final demand services: Prices for final demand services edged down 0.1 percent in July, the first decline since falling 0.2 percent in December 2017. The July decrease is attributable to the index for final demand trade services, which moved down 0.8 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, prices for final demand services less trade, transportation, and warehousing and the index for final demand transportation and warehousing services advanced 0.3 percent.

Product detail: Leading the July decline in prices for final demand services, margins for fuels and lubricants retailing dropped 12.7 percent. The indexes for machinery and equipment parts and supplies wholesaling, food retailing, hospital outpatient care, and airline passenger services also moved lower. Conversely, prices for guestroom rental climbed 3.9 percent. The indexes for apparel, jewelry, footwear, and accessories retailing; inpatient care; and truck transportation of freight also increased.

Intermediate Demand by Commodity Type

Within intermediate demand in July, prices for processed goods were unchanged, the index for unprocessed goods advanced 2.7 percent, and prices for services moved up 0.2 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand was unchanged in July following a 0.7-percent rise in June. In July, prices for processed materials less foods and energy advanced 0.3 percent. In contrast, the index for processed energy goods fell 1.3 percent, and prices for processed foods and feeds declined 0.9 percent. For the 12 months ended in July, the index for processed goods for intermediate demand increased 6.8 percent.

Product detail: In July, prices for basic organic chemicals advanced 2.1 percent. The indexes for steel mill products; carbon and graphite products for electrical machinery and equipment; liquefied petroleum gas; and canned, cooked, smoked, or prepared poultry also moved higher. Conversely, prices for commercial electric power fell 2.4 percent. The indexes for diesel fuel, industrial electric power, meats, and fabricated structural metal also declined. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand moved up 2.7 percent in July, the largest rise since a 3.6-percent advance in January 2017. The July increase can be traced to prices for unprocessed energy materials, which jumped 8.6 percent. In contrast, the indexes for unprocessed foodstuffs and feedstuffs and for unprocessed nonfood materials less energy fell 2.0 percent and 1.2 percent, respectively. For the 12 months ended in July, prices for unprocessed goods for intermediate demand rose 8.2 percent, the largest advance since an 11.0-percent increase in November 2017.

Product detail: Leading the July increase in the index for unprocessed goods for intermediate demand, crude petroleum prices advanced 14.1 percent. The indexes for natural gas, fresh fruits and melons, slaughter steers and heifers, corrugated wastepaper, and coal also moved up. Conversely, prices for hay, hayseeds, and oilseeds dropped 14.0 percent. The indexes for corn and nonferrous scrap also moved lower.

Services for intermediate demand: The index for services for intermediate demand advanced 0.2 percent in July after edging up 0.1 percent in June. Leading the July increase, prices for services less trade, transportation, and warehousing for intermediate demand rose 0.3 percent. The index for transportation and warehousing services for intermediate demand advanced 0.2 percent. In contrast, margins for trade services for intermediate demand declined 0.7 percent. For the 12 months ended in July, prices for services for intermediate demand increased 3.0 percent.

Product detail: A major factor in the July increase in prices for services for intermediate demand was the index for securities brokerage, dealing, investment advice, and related services, which advanced 1.5 percent. The indexes for metals, minerals, and ores wholesaling; television advertising time sales; business loans (partial); gross rents for retail properties; and legal services also rose. Conversely, margins for machinery and equipment parts and supplies wholesaling declined 4.6 percent. The indexes for internet advertising sales (excluding internet advertising sold by print publishers) and airline passenger services also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand edged down 0.1 percent in July, the first decline since a 0.3-percent decrease in August 2016. In July, the indexes for both total services inputs and total goods inputs to stage 4 intermediate demand fell 0.1 percent. (See table D.) Declines in the indexes for machinery and equipment parts and supplies wholesaling, electric power, fabricated structural metal, diesel fuel, and meats outweighed increases in the indexes for metals, minerals, and ores wholesaling; gross rents for retail properties; fresh fruits and melons; and legal services. (See table 6.) For the 12 months ended in July, prices for stage 4 intermediate demand climbed 3.7 percent.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand were unchanged in July following a 0.5-percent rise in June. In July, the indexes for both total services inputs and total goods inputs to stage 3 intermediate demand were unchanged. Advances in the indexes for metals, minerals, and ores wholesaling; basic organic chemicals; slaughter steers and heifers; steel mill products; and carbon and graphite products for electrical machinery and equipment offset declines in the indexes for machinery and equipment parts and supplies wholesaling; jet fuel; hay, hayseeds, and oilseeds; slaughter barrows and gilts; and electric power. For the 12 months ended in July, prices for stage 3 intermediate demand moved up 5.6 percent, the largest 12-month increase since a 5.7-percent rise in November 2017.

Stage 2 intermediate demand: The index for stage 2 intermediate demand increased 1.4 percent, the largest advance since moving up 1.4 percent in April 2017. In July, prices for total goods inputs to stage 2 intermediate demand rose 2.9 percent, and the index for total services inputs increased 0.3 percent. Higher prices for crude petroleum; natural gas; steel mill products; plastic resins and materials; liquefied petroleum gas; and securities brokerage, dealing, investment advice, and related services outweighed decreases in the indexes for hay, hayseeds, and oilseeds; corn; and fuels and lubricants retailing. For the 12 months ended in July, prices for stage 2 intermediate demand rose 6.9 percent, the largest 12-month advance since a 6.9-percent increase in April 2017.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand moved up 0.2 percent in July, the fourth consecutive rise. In July, the index for total services inputs to stage 1 intermediate demand advanced 0.3 percent, and prices for total goods inputs inched up 0.1 percent. Increases in the indexes for metals, minerals, and ores wholesaling; basic organic chemicals; crude petroleum; corrugated wastepaper; carbon and graphite products for electrical machinery and equipment; and guestroom rental outweighed decreases in the indexes for diesel fuel, machinery and equipment parts and supplies wholesaling, and nonferrous scrap. For the 12 months ended in July, the index for stage 1 intermediate demand rose 7.3 percent.

Variance Estimates for the PPI

The Producer Price Index (PPI) program recently published variance estimates for 2017. These variance estimates measure the uncertainty caused by using a sample, rather than the entire population, to calculate PPI indexes. Variance estimates are available on the PPI website at www.bls.gov/ppi/ppivariance.htm or by contacting the PPI Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691-7705.