December 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 up 0.1 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices were unchanged in November and rose 0.4 percent in October. (See table A.) On an unadjusted basis, the final demand index moved up 1.3 percent in 2019, after a 2.6-percent advance in 2018.

The December increase in the final demand index was the result of a 0.3-percent rise in prices for final demand goods. The index for final demand services was unchanged.

Prices for final demand less foods, energy, and trade services inched up 0.1 percent in December following no change in November. In 2019, the index for final demand less foods, energy, and trade services climbed 1.5 percent after advancing 2.8 percent in 2018.

Final Demand

Final demand goods: The index for final demand goods rose 0.3 percent in December, the same as in November. Most of the increase in December can be traced to a 1.5-percent advance in prices for final demand energy. The index for final demand goods less foods and energy edged up 0.1 percent. In contrast, prices for final demand foods moved down 0.2 percent.

Product detail: Over 60 percent of the December increase in the index for final demand goods can be attributed to a 3.7-percent advance in gasoline prices. The indexes for diesel fuel, fresh fruits and melons, carbon steel scrap, residential electric power, and pork also moved higher. Conversely, prices for beef and veal fell 7.0 percent. The indexes for jet fuel and for plastic resins and materials also declined. (See table 4.)

Final demand services: Prices for final demand services were unchanged in December following a 0.3-percent decrease in November. In December, a 2.7-percent advance in the index for final demand transportation and warehousing services offset a 0.3-percent decline in margins for final demand trade services and a 0.1-percent decrease in the index for final demand services less trade, transportation, and warehousing. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: In December, prices for transportation of passengers (partial) jumped 8.5 percent. The indexes for machinery and vehicle wholesaling; machinery and equipment parts and supplies wholesaling; health, beauty, and optical goods retailing; and portfolio management also increased. In contrast, margins for apparel, jewelry, footwear, and accessories retailing declined 3.7 percent. The indexes for chemicals and allied products wholesaling, guestroom rental, fuels and lubricants retailing, and professional and commercial equipment wholesaling also moved lower.

Intermediate Demand by Commodity Type

Within intermediate demand in December, prices for processed goods edged up 0.1 percent, the index for unprocessed goods rose 1.8 percent, and prices for services advanced 0.4 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved up 0.1 percent in December, the third consecutive rise. Most of the increase in December can be attributed to prices for processed energy goods, which rose 1.0 percent. The index for processed foods and feeds edged up 0.1 percent. Conversely, prices for processed materials less foods and energy declined 0.2 percent. In 2019, the index for processed goods for intermediate demand fell 1.7 percent following a 2.8-percent advance in 2018.

Product detail: Leading the December increase in the index for processed goods for intermediate demand, prices for diesel fuel jumped 6.4 percent. The indexes for gasoline, primary basic organic chemicals, fabricated structural metal, and processed young chickens also moved up. In contrast, prices for steel mill products declined 1.8 percent. The indexes for natural gas to electric utilities, beef and veal, and lubricating oil base stocks also fell. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand increased 1.8 percent in December after jumping 3.9 percent in November. Over half of the broad-based rise in December can be traced to prices for unprocessed foodstuffs and feedstuffs, which advanced 2.3 percent. The indexes for unprocessed nonfood materials less energy and for unprocessed energy materials climbed 3.0 percent and 0.4 percent, respectively. In 2019, prices for unprocessed goods for intermediate demand dropped 7.3 percent after advancing 3.7 percent in 2018.

Product detail: A major factor in the December increase in prices for unprocessed goods for intermediate demand was the index for raw milk, which rose 8.8 percent. Prices for crude petroleum, slaughter poultry, carbon steel scrap, slaughter steers and heifers, and fresh fruits and melons also moved higher. Conversely, the index for natural gas fell 4.6 percent. Prices for corn and wastepaper also moved lower.

Services for intermediate demand: The index for services for intermediate demand increased 0.4 percent in December after three consecutive declines. Over 40 percent of the broad-based advance can be traced to prices for transportation and warehousing services for intermediate demand, which climbed 1.2 percent. The indexes for services less trade, transportation, and warehousing for intermediate demand and for trade services for intermediate demand moved up 0.2 percent and 0.3 percent, respectively. In 2019, prices for services for intermediate demand rose 1.8 percent following a 3.1-percent increase in 2018.

Product detail: In December, prices for arrangement of freight and cargo transportation climbed 4.0 percent. The indexes for machinery and equipment parts and supplies wholesaling, transportation of passengers (partial), portfolio management, television advertising time sales, and staffing services also moved higher. In contrast, margins for chemicals and allied products wholesaling fell 4.2 percent. Prices for deposit services (partial) and for tax preparation and planning also decreased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand increased 0.3 percent in December, the largest advance since rising 0.3 percent in July. In December, the indexes for both total goods inputs and total services inputs to stage 4 intermediate demand moved up 0.4 percent, while prices for total construction inputs were unchanged. (See table 3.) Increases in the indexes for machinery and equipment parts and supplies wholesaling, diesel fuel, portfolio management, transportation of passengers (partial), gross rents for retail properties, and fresh fruits and melons outweighed declines in the indexes for chemicals and allied products wholesaling, beef and veal, and deposit services (partial). (See table 6.) In 2019, prices for stage 4 intermediate demand advanced 1.4 percent after rising 3.1 percent in 2018.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand rose 0.6 percent in December following no change in November. In December, the index for total goods inputs to stage 3 intermediate demand jumped 1.1 percent, and prices for total services inputs moved up 0.2 percent. Advances in the indexes for raw milk, slaughter poultry, gasoline, machinery and equipment parts and supplies wholesaling, diesel fuel, and slaughter steers and heifers outweighed decreases in the indexes for chemicals and allied products wholesaling, ungraded chicken eggs, and asphalt. In 2019, prices for stage 3 intermediate demand increased 0.7 percent after climbing 2.0 percent in 2018.

Stage 2 intermediate demand: The index for stage 2 intermediate demand advanced 0.3 percent in December following a 1.3-percent jump in November. In December, prices for total services inputs to stage 2 intermediate demand moved up 0.7 percent. Conversely, the index for total goods inputs fell 0.3 percent. Rising prices for transportation of passengers (partial), crude petroleum, cable network advertising time sales, portfolio management, staffing services, and legal services outweighed declines in the indexes for natural gas, steel mill products, and guestroom rental. In 2019, prices for stage 2 intermediate demand decreased 3.1 percent after climbing 3.6 percent in 2018.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand rose 0.7 percent in December, the largest increase since advancing 0.9 percent in March. In December, the index for total goods inputs to stage 1 intermediate demand jumped 1.1 percent, and prices for total services inputs moved up 0.2 percent. Advances in the indexes for diesel fuel, carbon steel scrap, transportation of passengers (partial), machinery and equipment parts and supplies wholesaling, primary basic organic chemicals, and gasoline outweighed decreases in the indexes for chemicals and allied products wholesaling, corn, and deposit services (partial). In 2019, prices for stage 1 intermediate demand fell 2.2 percent after rising 3.1 percent in 2018.

Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 14, 2020

Each year with the release of PPI data for January, seasonal adjustment factors and relative importance figures are recalculated to reflect price movements from the just-completed calendar year. The following seasonal information will be available on February 14, 2020 (2 workdays prior to the release of PPI data for January 2020 on February 19, 2020):

* Direct seasonal factors for PPI commodity indexes for the year 2020, * Recalculated seasonal factors for the last 5 years (2015-2019) for PPI commodity indexes, * Recalculated seasonal factors for the last 5 years (2015-2019) for PPI Final Demand- Intermediate Demand indexes, * Recalculated seasonal index data for the last 5 years (2015-2019) for Final Demand- Intermediate Demand and commodity indexes. This revision to seasonally adjusted indexes for the previous 5 years will be posted to the PPI database on the BLS website.

In addition, the following relative importance tables, which include values for December 2019, will be available on February 14, 2020:

* Final demand by individual commodities * Final demand by component series * Individual commodities of intermediate demand by commodity type * Component series of intermediate demand by commodity type * Individual commodities of intermediate demand by production flow * Component series of intermediate demand by production flow * Commodities, all levels * Wherever-provided services and construction

This information will be available on the PPI website at www.bls.gov/ppi or by contacting the PPI Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691-7705.