September 2018 Producer Price Index

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The Producer Price Index for final demand increased 0.2 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices declined 0.1 percent in August and were unchanged in July. (See table A.) On an unadjusted basis, the final demand index advanced 2.6 percent for the 12 months ended in September.

In September, the rise in the final demand index can be traced to a 0.3-percent increase in prices for final demand services. In contrast, the index for final demand goods decreased 0.1 percent.

The index for final demand less foods, energy, and trade services moved up 0.4 percent in September, the largest rise since a 0.5-percent increase in January. For the 12 months ended in September, prices for final demand less foods, energy, and trade services advanced 2.9 percent.

Final Demand

Final demand services: The index for final demand services increased 0.3 percent in September following two consecutive declines of 0.1 percent. The broad-based advance was led by a 1.8-percent jump in the index for final demand transportation and warehousing services. Prices for final demand services less trade, transportation, and warehousing rose 0.3 percent, and the index for final demand trade services inched up 0.1 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: In September, over one-third of the advance in prices for final demand services can be traced to the index for airline passenger services, which rose 5.5 percent. The indexes for food and alcohol wholesaling; deposit services (partial); outpatient care (partial); apparel wholesaling; and lawn, garden, farm equipment, and supplies retailing also moved higher. Conversely, margins for apparel, jewelry, footwear, and accessories retailing fell 2.5 percent. The indexes for automotive fuels and lubricants retailing and for traveler accommodation services also declined. (See table 4.)

Final demand goods: The index for final demand goods edged down 0.1 percent in September, the first decrease since a 0.5-percent drop in May 2017. Leading the September decline, prices for final demand energy fell 0.8 percent. The index for final demand foods decreased 0.6 percent. In contrast, prices for final demand goods less foods and energy rose 0.2 percent.

Product detail: Leading the September decline in the index for final demand goods, gasoline prices fell 3.5 percent. The indexes for electric power; iron and steel scrap; canned, cooked, smoked, or prepared poultry; and fresh and dry vegetables also moved down. Conversely, the index for light motor trucks rose 0.8 percent. Prices for liquefied petroleum gas, pharmaceutical preparations, and unprocessed and prepared seafood also increased.

Intermediate Demand by Commodity Type

Within intermediate demand in September, prices for processed goods were unchanged, the index for unprocessed goods increased 1.7 percent, and prices for services moved up 0.5 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand was unchanged in September, the same as in both August and July. In September, prices for processed materials less foods and energy advanced 0.2 percent. In contrast, the index for processed foods and feeds decreased 1.4 percent, and prices for processed energy goods declined 0.2 percent. For the 12 months ended in September, the index for processed goods for intermediate demand climbed 5.8 percent.

Product detail: In September, prices for primary basic organic chemicals rose 1.9 percent. The indexes for liquefied petroleum gas, diesel fuel, plastic resins and materials, and beef and veal also increased. Conversely, prices for prepared animal feeds moved down 3.3 percent. The indexes for gasoline, electric power, residual fuels, and ethanol also fell. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand advanced 1.7 percent in September following a 5.8-percent decline in August. Most of the increase is attributable to a 4.7-percent rise in the index for unprocessed energy materials. Prices for unprocessed foodstuffs and feedstuffs moved up 0.6 percent. In contrast, the index for unprocessed nonfood materials less energy declined 2.8 percent. For the 12 months ended in September, prices for unprocessed goods for intermediate demand rose 4.3 percent.

Product detail: Leading the September increase in the index for unprocessed goods for intermediate demand, prices for crude petroleum advanced 8.7 percent. The indexes for slaughter steers and heifers; natural gas; raw milk; unprocessed finfish; and construction sand, gravel, and crushed stone also moved higher. Conversely, prices for iron and steel scrap decreased 6.8 percent. The indexes for hay, hayseeds, and oilseeds and coal also moved lower.

Services for intermediate demand: The index for services for intermediate demand climbed 0.5 percent in September, the largest increase since rising 0.6 percent in October 2017. In September, half of the broad-based advance can be traced to prices for services less trade, transportation, and warehousing for intermediate demand, which moved up 0.3 percent. The index for transportation and warehousing services for intermediate demand increased 1.0 percent, and margins for trade services for intermediate demand rose 0.7 percent. For the 12 months ended in September, prices for services for intermediate demand moved up 3.3 percent, the largest advance since climbing 3.3 percent in October 2017.

Product detail: In September, a major factor in the increase in prices for services for intermediate demand was the index for deposit services (partial), which jumped 4.1 percent. The indexes for food and alcohol wholesaling, machinery and equipment parts and supplies wholesaling, airline passenger services, accounting services (partial), and portfolio management also moved higher. In contrast, gross rents for retail properties fell 2.3 percent. The indexes for cable network advertising time sales and for paper and plastics products wholesaling also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand advanced 0.3 percent in September after no change in August. In September, the index for total services inputs to stage 4 intermediate demand rose 0.5 percent, while prices for total goods inputs were unchanged. (See table D.) Increases in the indexes for machinery and equipment parts and supplies wholesaling, food and alcohol wholesaling, portfolio management, deposit services (partial), diesel fuel, and airline passenger services outweighed decreases in the indexes for gross rents for retail properties, electric power, and gasoline. (See table 6.) For the 12 months ended in September, prices for stage 4 intermediate demand moved up 3.6 percent.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand rose 0.3 percent in September following a 0.8-percent decline in August. In September, the index for total services inputs to stage 3 intermediate demand moved up 0.4 percent, and prices for total goods inputs increased 0.2 percent. Advances in the indexes for food and alcohol wholesaling; slaughter steers and heifers; raw milk; machinery and equipment parts and supplies wholesaling; primary basic organic chemicals; and courier, messenger, and U.S. postal services outweighed decreases in prices for gasoline, slaughter chickens, and gross rents for retail properties. For the 12 months ended in September, the index for stage 3 intermediate demand rose 4.4 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand increased 0.9 percent in September after falling 1.2 percent in August. In September, prices for total goods inputs to stage 2 intermediate demand jumped 1.9 percent, and the index for total services inputs moved up 0.2 percent. Advances in prices for crude petroleum, gas fuels, airline passenger services, plastic resins and materials, accounting services (partial), and portfolio management outweighed declines in the indexes for cable network advertising time sales; hay, hayseeds, and oilseeds; and prepared animal feeds. For the 12 months ended in September, prices for stage 2 intermediate demand rose 5.8 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand was unchanged in September following a 0.5-percent decrease in August. In September, a 0.6-percent increase in prices for total services inputs to stage 1 intermediate demand offset a 0.4-percent decline in the index for total goods inputs. Prices for airline passenger services, diesel fuel, crude petroleum, primary basic organic chemicals, and deposit services (partial) advanced, while the indexes for iron and steel scrap; prepared animal feeds; gasoline; electric power; and metals, minerals, and ores wholesaling decreased. For the 12 months ended in September, prices for stage 1 intermediate demand rose 5.5 percent.