January 2020 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 advanced 0.5 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.2 percent in December and declined 0.1 percent in November. (See table A.) On an unadjusted basis, the final demand index increased 2.1 percent for the 12 months ended in January, the largest advance since moving up 2.1 percent for the 12 months ended May 2019.

In January, 90 percent of the increase in the final demand index is attributable to prices for final demand services, which climbed 0.7 percent. The index for final demand goods inched up 0.1 percent.

Prices for final demand less foods, energy, and trade services advanced 0.4 percent in January, the largest increase since a 0.4-percent rise in April 2019. For the 12 months ended in January, the index for final demand less foods, energy, and trade services moved up 1.5 percent.

Final Demand

Final demand services: The index for final demand services climbed 0.7 percent in January, the largest increase since rising 0.7 percent in October 2018. In January, margins for final demand trade services advanced 1.2 percent, and prices for final demand services less trade, transportation, and warehousing moved up 0.6 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, the index for final demand transportation and warehousing services fell 1.6 percent.

Product detail: Forty percent of the January increase in the index for final demand services can be traced to margins for apparel, jewelry, footwear, and accessories retailing, which jumped 10.3 percent. The indexes for machinery and vehicle wholesaling; health, beauty, and optical goods retailing; inpatient care; guestroom rental; and portfolio management also moved higher. Conversely, prices for airline passenger services decreased 5.8 percent. The indexes for professional and commercial equipment wholesaling and for wireless telecommunication services also declined. (See table 4.)

Final demand goods: Prices for final demand goods inched up 0.1 percent in January, the fourth consecutive rise. Leading the January increase, the index for final demand goods less foods and energy climbed 0.3 percent. Prices for final demand foods advanced 0.2 percent. In contrast, the index for final demand energy fell 0.7 percent.

Product detail: A 13.9-percent rise for prices of iron and steel scrap was a major factor in the January advance in the index for final demand goods. Prices for fresh and dry vegetables; jet fuel; search, detection, navigation, and guidance systems and equipment; and grains also moved higher. Conversely, the gasoline index decreased 1.5 percent. Prices for chicken eggs, diesel fuel, and motor vehicles also declined.

Intermediate Demand by Commodity Type

Within intermediate demand in January, prices for processed goods declined 0.3 percent and the index for unprocessed goods fell 0.6 percent, while prices for services were unchanged. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand decreased 0.3 percent in January following three consecutive increases. Leading the decline, prices for processed energy goods fell 2.1 percent. The index for processed foods and feeds edged down 0.1 percent. In contrast, prices for processed materials less foods and energy advanced 0.3 percent. For the 12 months ended in January, the index for processed goods for intermediate demand fell 1.0 percent.

Product detail: Leading the January decrease in prices for processed goods for intermediate demand, the index for diesel fuel dropped 5.5 percent. Prices for electric power, gasoline, natural gas to electric utilities, hot rolled steel sheet and strip, and beef and veal also moved lower. Conversely, the index for basic organic chemicals climbed 2.2 percent. Prices for jet fuel and prepared animal feeds also rose. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand moved down 0.6 percent in January following two consecutive increases. The decline can be attributed to a 5.7-percent drop in the index for unprocessed energy materials. In contrast, prices for unprocessed nonfood materials less energy rose 5.6 percent, and the index for unprocessed foodstuffs and feedstuffs climbed 0.9 percent. For the 12 months ended in January, prices for unprocessed goods for intermediate demand fell 3.2 percent.

Product detail: Leading the January decrease in the index for unprocessed goods for intermediate demand, prices for natural gas dropped 14.3 percent. The indexes for crude petroleum, ungraded chicken eggs, strawberries, slaughter hogs, and recyclable plastics also fell. Conversely, prices for iron and steel rose 2.8 percent. The indexes for nonferrous metals and grains also advanced.

Services for intermediate demand: The index for services for intermediate demand was unchanged in January, after increasing 0.4 percent in December. In January, advances of 0.1 percent in prices for services less trade, transportation, and warehousing for intermediate demand and 0.3 percent in margins for trade services for intermediate demand offset a 0.9-percent decline in the index for transportation and warehousing services for intermediate demand. For the 12 months ended in January, the index for services for intermediate demand moved up 1.7 percent.

Product detail: In January, prices for portfolio management rose 2.3 percent. The indexes for television advertising time sales; hardware, building materials, and supplies retailing; chemicals and allied products wholesaling; and bundled wired telecommunications access services also increased. In contrast, prices for airline passenger services moved down 5.8 percent. The indexes for business loans (partial), staffing services, machinery and equipment parts and supplies wholesaling, and arrangement of freight and cargo transportation also fell.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand decreased 0.1 percent in January, the first decline since falling 0.2 percent in June 2019. In January, the index for total goods inputs to stage 4 intermediate demand inched down 0.1 percent, while prices for total services inputs were unchanged. (See table D.) Decreases in the indexes for diesel fuel, machinery and equipment parts and supplies wholesaling, business loans (partial), staffing services, and electric power outweighed advances in the indexes for portfolio management; chemicals and allied products wholesaling; hardware, building materials, and supplies retailing; and paving mixtures and blocks. (See table 6.) For the 12 months ended in January, prices for stage 4 intermediate demand rose 1.5 percent, the largest increase since moving up 1.6 percent in the 12 months ended August 2019.

Stage 3 intermediate demand: The index for stage 3 intermediate demand declined 0.1 percent in January following a 0.6-percent rise in December. In January, prices for both total goods inputs and total services inputs to stage 3 intermediate demand edged down 0.1 percent. Decreases in the indexes for ungraded chicken eggs, machinery and equipment parts and supplies wholesaling, arrangement of freight and cargo transportation, diesel fuel, and business loans (partial) outweighed advances in prices for jet fuel, asphalt, basic organic chemicals, and bundled wired telecommunications access services. For the 12 months ended in January, the index for stage 3 intermediate demand moved up 0.9 percent, the largest increase since rising 1.0 percent in the 12 months ended May 2019.

Stage 2 intermediate demand: Prices for stage 2 intermediate demand moved down 0.6 percent in January after advancing 0.3 percent in December. In January, the index for total goods inputs to stage 2 intermediate demand dropped 1.5 percent, and prices for total services inputs fell 0.1 percent. Declines in the indexes for gas fuels, staffing services, crude petroleum, airline passenger services, arrangement of freight and cargo transportation, and advertising agency services outweighed rising prices for portfolio management, cable network advertising time sales, and oilseeds. For the 12 months ended in January, the index for stage 2 intermediate demand decreased 1.8 percent.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand rose 0.3 percent in January, the third consecutive increase. In January, the index for total goods inputs to stage 1 intermediate demand advanced 0.5 percent, and prices for total services inputs inched up 0.1 percent. Advances in the indexes for iron and steel scrap, basic organic chemicals, nonferrous scrap, grains, chemicals and allied products wholesaling, and guestroom rental outweighed decreases in prices for diesel fuel, business loans (partial), and airline passenger services. For the 12 months ended in January, the index for stage 1 intermediate demand fell 0.8 percent.

Recalculation of Seasonal Adjustment Factors

Effective with this release, seasonal adjustment factors have been recalculated to reflect price- movement patterns during 2019 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 2015 through December 2019.

Revised seasonally adjusted data for this period, as well as seasonal adjustment factors for directly adjusted commodity indexes to be used through December 2020, were released February 14, 2020. 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 www.bls.gov/ppi.

Tables E and F below provide monthly seasonally adjusted percent changes for major FD-ID system indexes in 2019, based on former and recalculated seasonal factors. These percent changes include final price data through August 2019 and may differ from values shown in tables A through D of this release, which include final price data through September 2019.