January 2021 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 increased 1.3 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This advance is the largest since the index began in December 2009. Final demand prices rose 0.3 percent in December and 0.1 percent in November. (See table A.) On an unadjusted basis, the index for final demand moved up 1.7 percent for the 12 months ended January 2021, the largest increase since climbing 2.0 percent for the 12 months ended January 2020.

Two-thirds of the January advance in prices for final demand can be traced to a 1.3-percent rise in the index for final demand services. Prices for final demand goods increased 1.4 percent.

Prices for final demand less foods, energy, and trade services moved up 1.2 percent in January, the largest advance since the index began in September 2013. For the 12 months ended in January, prices for final demand less foods, energy, and trade services rose 2.0 percent, the largest increase since a 2.1-percent advance for the 12 months ended June 2019.

Final Demand

Final demand services: Prices for final demand services rose 1.3 percent in January, the largest advance since the index began in December 2009. Over 70 percent of the broad-based January increase is attributable to a 1.4-percent jump in prices for final demand services less trade, transportation, and warehousing. The indexes for final demand trade services and for final demand transportation and warehousing services also moved higher, 1.0 percent and 1.3 percent, respectively. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product Detail: One-fourth of the January advance in the index for final demand services can be traced to a 9.4-percent rise in prices for portfolio management. The indexes for outpatient care (partial); guestroom rental; machinery and vehicle wholesaling; apparel, jewelry, footwear, and accessories retailing; and truck transportation of freight also moved higher. Conversely, margins for automobile retailing (partial) fell 7.7 percent. The indexes for food retailing and for property and casualty insurance also declined. (See table 4.)

Final demand goods: Prices for final demand goods moved up 1.4 percent in January, the largest increase since the index jumped 1.4 percent in May 2020. Nearly 60 percent of the broad-based January advance is attributable to a 5.1-percent rise in prices for final demand energy. The indexes for final demand goods less foods and energy and for final demand foods also climbed, 0.8 percent and 0.2 percent, respectively.

Product Detail: Forty percent of the January increase in prices for final demand goods can be traced to a 13.6-percent jump in the index for gasoline. Prices for iron and steel scrap, oilseeds, industrial chemicals, diesel fuel, and light motor trucks also rose. In contrast, the index for beef and veal declined 8.4 percent. Prices for fresh and dry vegetables and for search, detection, navigation, and guidance systems and equipment also fell.

Intermediate Demand by Commodity Type

Within intermediate demand in January, prices for processed goods advanced 1.7 percent, the index for unprocessed goods rose 3.8 percent, and prices for services increased 1.3 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand rose 1.7 percent in January, the largest advance since jumping 1.7 percent in January 2010. Over three-quarters of the broad-based January 2021 increase is attributable to prices for processed materials less foods and energy, which climbed 1.8 percent. The indexes for processed energy goods and for processed foods and feeds moved up 2.0 percent and 0.1 percent, respectively. For the 12 months ended in January, prices for processed goods for intermediate demand rose 3.1 percent, the largest advance since increasing 4.5 percent for the 12 months ended November 2018.

Product detail: In January, nearly a quarter of the rise in the index for processed goods for intermediate demand can be traced to a 7.0-percent advance in prices for industrial chemicals. The indexes for diesel fuel, gasoline, steel mill products, softwood lumber, and prepared animal feeds also moved higher. Conversely, prices for natural gas to electric utilities dropped 21.1 percent. The indexes for beef and veal and for primary nonferrous metals also fell. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand advanced 3.8 percent in January, the ninth consecutive increase. About two-thirds of the January rise can be traced to prices for unprocessed nonfood materials less energy, which jumped 8.9 percent. The index for unprocessed energy materials climbed 5.3 percent. In contrast, prices for unprocessed foodstuffs and feedstuffs declined 1.2 percent. For the 12 months ended in January, the index for unprocessed goods for intermediate demand increased 6.6 percent, the largest advance since rising 7.6 percent for the 12 months ended October 2018.

Product detail: Over half of the January increase in prices for unprocessed goods for intermediate demand is attributable to the index for iron and steel scrap, which jumped 20.6 percent. Prices for crude petroleum, grains, oilseeds, nonferrous metals, and fresh fruits and melons also moved higher. Conversely, the index for raw milk dropped 20.4 percent. Prices for natural gas and recyclable plastics also declined.

Services for intermediate demand: Prices for services for intermediate demand increased 1.3 percent in January, the largest advance since the index began in December 2009. Over three- quarters of the broad-based January rise can be attributed to prices for services less trade, transportation, and warehousing for intermediate demand, which moved up 1.5 percent. Margins for trade services for intermediate demand increased 1.1 percent, and the index for transportation and warehousing services for intermediate demand advanced 0.4 percent. For the 12 months ended in January, prices for services for intermediate demand moved up 2.8 percent, the largest rise since climbing 2.8 percent for the 12 months ended May 2019.

Product detail: About 40 percent of the January rise in the index for services for intermediate demand can be traced to prices for administrative and general management consulting services, which jumped 22.9 percent. The indexes for portfolio management; metals, minerals, and ores wholesaling; guestroom rental; business loans (partial); and truck transportation of freight also moved higher. In contrast, prices for gross rents for office buildings fell 2.8 percent. The indexes for arrangement of freight and cargo transportation and for chemicals and allied products wholesaling also decreased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand advanced 1.4 percent in January, the ninth consecutive increase. In January, the index for total services inputs to stage 4 intermediate demand rose 1.4 percent, and prices for total goods inputs moved up 1.2 percent. (See table D.) Advances in the indexes for portfolio management; administrative and general management consulting services; metals, minerals, and ores wholesaling; grains; iron and steel; and gasoline outweighed decreases in the indexes for gross rents for office buildings, natural gas to electric utilities, and chemicals and allied products wholesaling. (See table 6.) For the 12 months ended in January, prices for stage 4 intermediate demand climbed 3.4 percent, the largest increase since rising 3.8 percent for the 12 months ended October 2018.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand rose 1.2 percent in January, after advancing 1.6 percent in December. In January, the index for total services inputs to stage 3 intermediate demand climbed 1.7 percent, and prices for total goods inputs moved up 0.7 percent. Increases in the indexes for administrative and general management consulting services; grains; diesel fuel; metals, minerals, and ores wholesaling; steel mill products; and industrial chemicals outweighed decreases in prices for raw milk, slaughter chickens, and arrangement of freight and cargo transportation. For the 12 months ended in January, the index for stage 3 intermediate demand rose 1.1 percent, the largest advance since rising 2.4 percent for the 12 months ended April 2019.

Stage 2 intermediate demand: The index for stage 2 intermediate demand increased 2.7 percent in January, the ninth consecutive advance. In January, prices for total goods inputs to stage 2 intermediate demand rose 4.8 percent, and the index for total services inputs moved up 1.1 percent. Increasing prices for crude petroleum, industrial chemicals, administrative and general management consulting services, iron and steel scrap, oilseeds, and liquefied petroleum gas outweighed decreases in the indexes for arrangement of freight and cargo transportation, television advertising time sales, and natural gas. For the 12 months ended in January, prices for stage 2 intermediate demand moved up 4.4 percent.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand moved up 1.7 percent in January, after rising 2.4 percent in December. In January, the index for total goods inputs to stage 1 intermediate demand increased 2.3 percent, and prices for total services inputs climbed 1.4 percent. Advances in the indexes for iron and steel; industrial chemicals; grains; diesel fuel; metals, minerals, and ores wholesaling; and guestroom rental outweighed decreases in the indexes for natural gas to electric utilities, gross rents for office buildings, and chemicals and allied products wholesaling. For the 12 months ended in January, prices for stage 1 intermediate demand moved up 3.8 percent, the largest increase since rising 4.8 percent for the 12 months ended November 2018.

PPI Updates Commodity Weight Allocations for the Final Demand-Intermediate Demand Aggregation Structure

Effective with this release, the Bureau of Labor Statistics has updated the weight allocations used to calculate the Producer Price Index (PPI) Final Demand-Intermediate Demand (FD-ID) indexes to more accurately reflect recent sales patterns. While PPI commodity index weights continue to be based on shipment values from the 2012 economic census, the proportions of these weights allocated to the various FD-ID categories have changed. The new allocations are based primarily on data from the 2012 Input-Output Accounts produced by the Bureau of Economic Analysis.

It is important to note that the allocation update did not change the PPI commodity classification system, reference base, the FD-ID aggregation structure, or historical index data. It has, however, resulted in substantial shifts in the relative importance figures of certain commodity components that make up the FD-ID indexes.

Relative importance figure tables for December 2020, which reflect the shift from 2007 to 2012 input-output relationships, are available on the BLS website at www.bls.gov/ppi. A detailed analysis of the PPI weight allocation update also is being posted to the PPI homepage. This information also may be requested from the PPI Section of Index Analysis and Public Information through e-mail to ppi-info@bls.gov or by calling (202) 691-7705. For more information about this update, contact Jonathan Weinhagen at weinhagen.jonathan@bls.gov or (202) 691-7709.

Recalculation of Seasonal Adjustment Factors

Effective with this release, seasonal adjustment factors have been recalculated to reflect price- movement patterns during 2020 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 2016 through December 2020.

Revised seasonally adjusted data for this period, as well as seasonal adjustment factors for directly adjusted commodity indexes to be used through December 2021, were released February 12, 2021. To obtain this information, contact the Producer Price Index 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 2020, based on former and recalculated seasonal factors. These percent changes include final price data through August 2020 and may differ from values shown in tables A through D of this release, which include final price data through September 2020.