March 2021 Producer Price Index

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The Producer Price Index for final demand increased 1.0 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.5 percent in February and 1.3 percent in January. (See table A.) On an unadjusted basis, the final demand index moved up 4.2 percent for the 12 months ended in March, the largest advance since rising 4.5 percent for the 12 months ended September 2011.

In March, almost 60 percent of the increase in the index for final demand can be traced to a 1.7- percent advance in prices for final demand goods. The index for final demand services moved up 0.7 percent.

Prices for final demand less foods, energy, and trade services rose 0.6 percent in March following an increase of 0.2 percent in February. For the 12 months ended in March, the index for final demand less foods, energy, and trade services moved up 3.1 percent, the largest advance since climbing 3.1 percent for the 12 months ended September 2018.

Final Demand

Final demand goods: Prices for final demand goods rose 1.7 percent in March, the largest increase since the index began in December 2009. Sixty percent of the broad-based advance in March is attributable to prices for final demand energy, which jumped 5.9 percent. The indexes for final demand goods less foods and energy and for final demand foods moved up 0.9 percent and 0.5 percent, respectively.

Product detail: Over one-fourth of the March increase in the index for final demand goods can be traced to an 8.8-percent jump in gasoline prices. The indexes for diesel fuel, residential electric power, industrial chemicals, steel mill products, and processed poultry also moved higher. In contrast, beef and veal prices fell 4.3 percent. The indexes for fresh and dry vegetables and for surgical and medical instruments also declined. (See table 4.)

Final demand services: The index for final demand services rose 0.7 percent in March, the third consecutive advance. Nearly half of the broad-based increase in March is attributable to margins for final demand trade services, which moved up 1.0 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services advanced 0.4 percent and 1.5 percent, respectively.

Product detail: Over 40 percent of the March increase in prices for final demand services can be traced to margins for machinery and vehicle wholesaling, which jumped 6.7 percent. The indexes for apparel, jewelry, footwear, and accessories retailing; transportation of freight and mail; portfolio management; loan services (partial); and food retailing also moved higher. Conversely, margins for health, beauty, and optical goods retailing decreased 4.2 percent. The indexes for automobiles and automobile parts retailing and for traveler accommodation services also declined.

Intermediate Demand by Commodity Type

Within intermediate demand in March, prices for processed goods increased 4.0 percent, the index for unprocessed goods rose 9.3 percent, and prices for services moved up 0.4 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved up 4.0 percent in March, the largest increase since a 4.5-percent jump in August 1974. Nearly 60 percent of the broad-based rise in March can be traced to a 3.2-percent advance in prices for processed materials less foods and energy. The indexes for processed energy goods and for processed foods and feeds moved up 8.8 percent and 0.9 percent, respectively. For the 12 months ended in March, prices for processed goods for intermediate demand rose 12.5 percent, the largest increase since jumping 15.3 percent for the 12 months ended September 2008.

Product Detail: Nearly one-fifth of the March increase in the index for processed goods for intermediate demand is attributable to a 13.5-percent jump in prices for iron and steel. The indexes for diesel fuel, industrial chemicals, industrial electric power, plastic resins and materials, and commercial electric power also moved higher. In contrast, prices for beef and veal dropped 4.3 percent. The indexes for secondary precious metals and for liquefied petroleum gas also declined. (See table 5.)

Unprocessed goods for intermediate demand: Prices for unprocessed goods for intermediate demand moved up 9.3 percent in March, the largest rise since a 12.3-percent increase in November 2006. Over 80 percent of the broad-based March advance can be traced to a 22.3-percent jump in the index for unprocessed energy materials. Prices for unprocessed nonfood materials less energy and for unprocessed foodstuffs and feedstuffs rose 3.2 percent and 1.4 percent, respectively. For the 12 months ended in March, the index for unprocessed goods for intermediate demand advanced 41.6 percent, the largest increase since jumping 49.0 percent for the 12 months ended July 2008.

Product Detail: Over four-fifths of the March increase in the index for unprocessed goods for intermediate demand can be traced to a 46.6-percent rise in prices for natural gas. The indexes for crude petroleum; slaughter hogs; carbon steel scrap; ungraded chicken eggs; and hay, hayseeds, and oilseeds also advanced. Conversely, prices for slaughter cows and bulls decreased 9.0 percent. The indexes for strawberries and for raw cotton also fell.

Services for intermediate demand: The index for services for intermediate demand moved up 0.4 percent in March, the fourth consecutive increase. Over half of the broad-based March rise can be traced to a 0.3-percent advance in prices for services less trade, transportation, and warehousing for intermediate demand. The indexes for transportation and warehousing services for intermediate demand and for trade services for intermediate demand increased 0.9 percent and 0.4 percent, respectively. For the 12 months ended in March, prices for services for intermediate demand climbed 4.0 percent, the largest advance since 12-month data were first calculated in November 2010.

Product Detail: Over one-third of the March increase in the index for services for intermediate demand can be traced to a 4.2-percent rise in prices for loan services (partial). The indexes for transportation of freight and mail; paper and plastics products wholesaling; investment banking; portfolio management; and building materials, paint, and hardware wholesaling also advanced. In contrast, margins for machinery and equipment parts and supplies wholesaling decreased 1.3 percent. Prices for temporary help services and for broadcast and network television advertising time sales also fell.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand rose 1.2 percent in March, the eleventh consecutive increase. In March, prices for total goods inputs to stage 4 intermediate demand advanced 2.0 percent, and the index for total services inputs moved up 0.4 percent. (See table D.) Increases in prices for iron and steel, industrial electric power, fabricated structural metal products, industrial chemicals, diesel fuel, and portfolio management outweighed declines in the indexes for machinery and equipment parts and supplies wholesaling, strawberries, and temporary help services. (See table 6.) For the 12 months ended in March, prices for stage 4 intermediate demand climbed 6.6 percent, the largest increase since 12-month data were first calculated in November 2010.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand advanced 2.8 percent in March, the largest increase since the index began in December 2009. In March, prices for total goods inputs to stage 3 intermediate demand rose 5.2 percent, and the index for total services inputs moved up 0.6 percent. Advances in prices for iron and steel, diesel fuel, plastic resins and materials, industrial chemicals, slaughter hogs, and transportation of freight and mail outweighed decreases in the indexes for slaughter cows and bulls, raw milk, and temporary help services. For the 12 months ended in March, prices for stage 3 intermediate demand jumped 9.4 percent, the largest rise since 12- month data were first calculated in November 2010.

Stage 2 intermediate demand: Prices for stage 2 intermediate demand rose 4.5 percent in March, the largest increase since the index began in December 2009. In March, prices for total goods inputs to stage 2 intermediate demand jumped 10.0 percent, and the index for total services inputs moved up 0.2 percent. Advances in the indexes for natural gas, crude petroleum, industrial chemicals, iron and steel, loan services (partial), and transportation of freight and mail outweighed declines in prices for temporary help services, broadcast and network television advertising time sales, and secondary precious metals. For the 12 months ended in March, the index for stage 2 intermediate demand jumped 16.7 percent, the largest increase since 12-month data were first calculated in November 2010.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand climbed 2.5 percent in March, the largest increase since the index began in December 2009. In March, the index for total goods inputs to stage 1 intermediate demand rose 4.5 percent, and prices for total services inputs moved up 0.5 percent. Advances in the indexes for diesel fuel, steel mill products, industrial chemicals, industrial electric power, carbon steel scrap, and investment banking outweighed decreases in the indexes for machinery and equipment parts and supplies wholesaling, internet advertising (sold by non-print publishers), and corn. For the 12 months ended in March, prices for stage 1 intermediate demand increased 11.2 percent, the largest 12-month advance since an 11.2- percent rise in August 2011.