January 2019 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 edged down 0.1 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices also fell 0.1 percent in December and inched up 0.1 percent in November. (See table A.) On an unadjusted basis, the final demand index advanced 2.0 percent for the 12 months ended in January.

In January, the decline in the final demand index can be traced to a 0.8-percent decrease in prices for final demand goods. In contrast, the index for final demand services increased 0.3 percent.

The index for final demand less foods, energy, and trade services rose 0.2 percent in January following no change in December. For the 12 months ended in January, prices for final demand less foods, energy, and trade services moved up 2.5 percent.

Final Demand

Final demand goods: The index for final demand goods fell 0.8 percent in January, the largest decrease since dropping 1.2 percent in September 2015. Over three-quarters of the January decline can be traced to prices for final demand energy, which moved down 3.8 percent. The index for final demand foods fell 1.7 percent. Conversely, prices for final demand goods less foods and energy climbed 0.3 percent.

Product detail: Forty percent of the decrease in the index for final demand goods is attributable to a 7.3-percent decline in gasoline prices. The indexes for fresh and dry vegetables, diesel fuel, fresh fruits and melons, basic organic chemicals, and jet fuel also moved lower. In contrast, prices for construction machinery and equipment rose 1.7 percent. The indexes for processed poultry and residential electric power also increased. (See table 4.)

Final demand services: The index for final demand services advanced 0.3 percent in January following no change in December. Over 80 percent of the rise can be traced to margins for final demand trade services, which increased 0.8 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services climbed 0.5 percent. The index for final demand services less trade, transportation, and warehousing was unchanged.

Product detail: Half of the advance in prices for final demand services is attributable to margins for apparel, jewelry, footwear, and accessories retailing, which rose 6.3 percent. The indexes for health, beauty, and optical goods retailing; machinery, equipment, parts, and supplies wholesaling; chemicals and allied products wholesaling; hospital inpatient care; and transportation of passengers (partial) also moved higher. Conversely, prices for portfolio management fell 5.2 percent. The indexes for automotive fuels and lubricants retailing and for physician care also decreased.

Intermediate Demand by Commodity Type

Within intermediate demand in January, prices for processed goods declined 1.4 percent, the index for unprocessed goods decreased 9.3 percent, and prices for services advanced 0.2 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved down 1.4 percent in January, the largest decline since falling 1.4 percent in September 2015. Over 80 percent of the January decrease can be traced to prices for processed energy goods, which declined 6.5 percent. The index for processed materials less foods and energy fell 0.3 percent. In contrast, prices for processed foods and feeds rose 0.5 percent. For the 12 months ended in January, the index for processed goods for intermediate demand increased 0.9 percent.

Product detail: In January, over one-third of the decline in the index for processed goods for intermediate demand can be attributed to prices for diesel fuel, which dropped 13.7 percent. The indexes for utility natural gas, basic organic chemicals, gasoline, plastic resins and materials, and jet fuel also moved lower. Conversely, prices for processed poultry rose 6.9 percent. The indexes for semifinished steel mill products and asphalt also advanced. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand moved down 9.3 percent in January, the largest decrease since a 9.6-percent drop in January 2015. Leading the broad-based decline in January 2019, prices for unprocessed energy materials fell 19.0 percent. The index for unprocessed nonfood materials less energy decreased 1.9 percent, and prices for unprocessed foodstuffs and feedstuffs moved down 0.5 percent. For the 12 months ended in January, the index for unprocessed goods for intermediate demand fell 3.1 percent, the largest drop since a 4.4-percent decline for the 12 months ended October 2016.

Product detail: Over three-quarters of the decrease in the index for unprocessed goods for intermediate demand can be traced to prices for natural gas, which fell 32.2 percent. The indexes for crude petroleum, fresh fruits and melons, iron and steel scrap, fresh vegetables (except potatoes), and ungraded chicken eggs also moved lower. In contrast, prices for slaughter poultry climbed 9.4 percent. The indexes for coal and construction sand, gravel, and crushed stone also rose.

Services for intermediate demand: The index for services for intermediate demand moved up 0.2 percent in January, the fifth consecutive increase. In January, nearly two-thirds of the broad-based advance can be attributed to margins for trade services for intermediate demand, which rose 0.7 percent. Prices for services less trade, transportation, and warehousing for intermediate demand edged up 0.1 percent, and the index for transportation and warehousing services for intermediate demand climbed 0.2 percent. For the 12 months ended in January, the index for services for intermediate demand increased 2.9 percent.

Product detail: Half of the rise in the index for services for intermediate demand can be traced to margins for machinery and equipment parts and supplies wholesaling, which advanced 2.2 percent. The indexes for business loans (partial), services related to securities brokerage and dealing (partial), chemicals and allied products wholesaling, temporary help services, and legal services also moved higher. Conversely, prices for portfolio management fell 5.2 percent. The indexes for administrative and general management consulting services and for paper and plastics products wholesaling also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand moved down 0.2 percent in January after edging up 0.1 percent in December. In January, prices for total goods inputs to stage 4 intermediate demand declined 0.4 percent. In contrast, the index for total services inputs moved up 0.2 percent. (See table D.) Lower prices for diesel fuel, portfolio management, fresh fruits and melons, gasoline, administrative and general management consulting services, and basic organic chemicals outweighed increases in the indexes for machinery and equipment parts and supplies wholesaling, chemicals and allied products wholesaling, and biological products (including diagnostic substances). (See table 6.) For the 12 months ended in January, prices for stage 4 intermediate demand moved up 2.4 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand decreased 0.5 percent in January, the third straight decline. In January, prices for total goods inputs to stage 3 intermediate demand fell 1.4 percent. Conversely, the index for total services inputs moved up 0.3 percent. Decreases in prices for gasoline, diesel fuel, jet fuel, basic organic chemicals, ungraded chicken eggs, and portfolio management outweighed increases in the indexes for machinery and equipment parts and supplies wholesaling, slaughter poultry, and raw milk. For the 12 months ended in January, prices for stage 3 intermediate demand advanced 0.9 percent.

Stage 2 intermediate demand: Prices for stage 2 intermediate demand dropped 3.8 percent in January, the largest decline since falling 4.4 percent in January 2015. In January 2019, the index for total goods inputs to stage 2 intermediate demand decreased 8.6 percent. In contrast, prices for total services inputs edged up 0.1 percent. Declines in the indexes for natural gas, crude petroleum, portfolio management, plastic resins and materials, basic organic chemicals, and diesel fuel outweighed advances in the indexes for network compensation for cable and broadcast television; temporary help services; and semifinished steel mill products. For the 12 months ended in January, prices for stage 2 intermediate demand moved up 0.7 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand fell 2.0 percent in January, the largest decline since decreasing 2.9 percent in January 2015. In January 2019, prices for total goods inputs to stage 1 intermediate demand moved down 3.7 percent. Conversely, the index for total services inputs advanced 0.2 percent. Lower prices for diesel fuel, basic organic chemicals, natural gas, iron and steel scrap, gasoline, and portfolio management outweighed increases in the indexes for chemicals and allied products wholesaling, business loans (partial), and soybean cake and meal. For the 12 months ended in January, prices for stage 1 intermediate demand advanced 0.4 percent.

Recalculation of Seasonal Adjustment Factors

Effective with this release, seasonal adjustment factors have been recalculated to reflect price-movement patterns during 2018 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 2014 through December 2018.

Revised seasonally adjusted data for this period, as well as seasonal adjustment factors for directly adjusted commodity indexes to be used through December 2019, were released February 12, 2019. 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 2018, based on former and recalculated seasonal factors. These percent changes include final price data through August 2018 and may differ from values shown in tables A through D of this release, which include final price data through September 2018.