August 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 0.7 percent in August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved up 1.0 percent in July, the same as in June. (See table A.) On an unadjusted basis, the final demand index rose 8.3 percent for the 12 months ended in August, the largest advance since 12-month data were first calculated in November 2010.

Leading the August increase in the index for final demand, prices for final demand services rose 0.7 percent. The index for final demand goods moved up 1.0 percent.

Prices for final demand less foods, energy, and trade services moved up 0.3 percent in August after increasing 0.9 percent in July. For the 12 months ended in August, the index for final demand less foods, energy, and trade services rose 6.3 percent, the largest advance since 12- month data were first calculated in August 2014.

Final Demand

Final demand services: Prices for final demand services moved up 0.7 percent in August, the eighth consecutive advance. Two-thirds of the broad-based increase in August can be traced to the index for final demand trade services, which rose 1.5 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services and for final demand services less trade, transportation, and warehousing climbed 2.8 percent and 0.1 percent, respectively.

Product detail: Over 30 percent of the August increase in prices for final demand services can be traced to a 7.8-percent rise in margins for health, beauty, and optical goods retailing. The indexes for transportation of passengers (partial), chemicals and allied products wholesaling, bundled wired telecommunications access services, machinery and equipment parts and supplies wholesaling, and traveler accommodation services also moved higher. Conversely, prices for hospital outpatient care fell 1.5 percent. The indexes for hardware, building materials, and supplies retailing and for securities brokerage, dealing, investment advice, and related services also decreased. (See table 4.)

Final demand goods: The index for final demand goods moved up 1.0 percent in August after increasing 0.6 percent in July. In August, half of the broad-based advance can be attributed to a 2.9- percent rise in prices for final demand foods. The indexes for final demand goods less foods and energy and for final demand energy also moved higher, 0.6 percent and 0.4 percent, respectively.

Product detail: About a quarter of the August advance in prices for final demand goods can be attributed to an 8.5-percent rise in the index for meats. Prices for residential natural gas, industrial chemicals, processed young chickens, motor vehicles, and steel mill products also moved higher. In contrast, the index for iron and steel scrap decreased 3.7 percent. Prices for diesel fuel and for natural, processed, and imitation cheese also moved lower.

Intermediate Demand by Commodity Type

Within intermediate demand in August, prices for processed goods advanced 1.0 percent, the index for unprocessed goods also increased 1.0 percent, and prices for services rose 0.3 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved up 1.0 percent in August after rising 1.7 percent in July. Most of the increase in August is attributable to prices for processed materials less foods and energy, which advanced 1.3 percent. The index for processed foods and feeds rose 2.1 percent. Conversely, prices for processed energy goods fell 0.6 percent. For the 12 months ended in August, the index for processed goods for intermediate demand climbed 23.0 percent, the largest 12-month increase since jumping 23.6 percent in February 1975.

Product detail: One-third of the August advance in the index for processed goods for intermediate demand can be traced to prices for industrial chemicals, which rose 4.9 percent. The indexes for steel mill products; meats; structural, architectural, and pre-engineered metal products; plastic products; and industrial electric power also moved higher. In contrast, diesel fuel prices decreased 1.6 percent. The indexes for softwood lumber and for natural, processed, and imitation cheese also declined. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand rose 1.0 percent in August, the fifth consecutive increase. The advance in August is attributable to prices for unprocessed foodstuffs and feedstuffs, which jumped 3.8 percent. Conversely, the index for unprocessed energy materials fell 0.2 percent, while prices for unprocessed nonfood materials less energy were unchanged. For the 12 months ended in August, the index for unprocessed goods for intermediate demand surged 50.1 percent.

Product detail: In August, an 11.0-percent increase in the index for slaughter poultry was a major factor in the rise in prices for unprocessed goods for intermediate demand. The indexes for natural gas, corn, wheat, slaughter steers and heifers, and corrugated recyclable paper also moved higher. In contrast, crude petroleum prices decreased 10.1 percent. The indexes for iron and steel scrap and for raw milk also declined.

Services for intermediate demand: The index for services for intermediate demand rose 0.3 percent in August, the ninth consecutive increase. In August, 80 percent of the advance can be traced to margins for trade services for intermediate demand, which moved up 1.1 percent. Prices for transportation and warehousing services for intermediate demand also rose 1.1 percent. Conversely, the index for services less trade, transportation, and warehousing for intermediate demand fell 0.2 percent. For the 12 months ended in August, prices for services for intermediate demand climbed 8.6 percent.

Product detail: Nearly 60 percent of the August increase in prices for services for intermediate demand can be attributed to margins for machinery and equipment parts and supplies wholesaling, which rose 2.8 percent. The indexes for metals, minerals, and ores wholesaling; transportation of passengers (partial); building materials, paint, and hardware wholesaling; nonresidential real estate services; and chemicals and allied products wholesaling also advanced. In contrast, prices for television advertising time sales fell 9.0 percent. The indexes for hardware, building material, and supplies retailing and for warehousing, storage, and related services also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand advanced 0.8 percent in August following a 1.1-percent increase in July. In August, the index for total goods inputs to stage 4 intermediate demand rose 0.9 percent, and prices for total services inputs moved up 0.7 percent. (See table D.) Increases in the indexes for meats; machinery and equipment parts and supplies wholesaling; metals, minerals, and ores wholesaling; structural, architectural, and pre-engineered metal products; steel mill products; and nonresidential real estate services outweighed declines in the indexes for securities brokerage, dealing, investment advice, and related services; softwood lumber; and hardware, building materials, and supplies retailing. (See table 6.) For the 12 months ended in August, prices for stage 4 intermediate demand rose 12.1 percent, the largest advance since 12-month data were first calculated in November 2010.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand advanced 1.0 percent in August following a 1.1-percent increase in July. In August, the index for total goods inputs to stage 3 intermediate demand rose 1.9 percent, and prices for total services inputs were unchanged. Advances in the indexes for steel mill products; slaughter poultry; metals, minerals, and ores wholesaling; industrial chemicals; corn; and slaughter steers and heifers outweighed decreasing prices for television advertising time sales, raw milk, and softwood lumber. For the 12 months ended in August, the index for stage 3 intermediate demand moved up 20.2 percent, the same as in July.

Stage 2 intermediate demand: The index for stage 2 intermediate demand advanced 0.4 percent in August, the fifth consecutive increase. In August, prices for total goods inputs to stage 2 intermediate demand rose 0.5 percent, and the index for total services inputs moved up 0.3 percent. Increases in the indexes for gas fuels; industrial chemicals; steel mill products; machinery and equipment parts and supplies wholesaling; transportation of passengers (partial); and oilseeds outweighed decreasing prices for crude petroleum, television advertising time sales, and softwood lumber. For the 12 months ended in August, the index for stage 2 intermediate demand advanced 21.8 percent.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand rose 0.9 percent in August following a 1.9-percent increase in July. In August, the index for total goods inputs to stage 1 intermediate demand moved up 1.3 percent, and prices for total services inputs advanced 0.5 percent. Increases in the indexes for industrial chemicals; steel mill products; metals, minerals, and ores wholesaling; transportation of passengers (partial); building materials, paint, and hardware wholesaling; and structural, architectural, and pre-engineered metal products outweighed decreases in the indexes for hardware, building materials, and supplies retailing; securities brokerage, dealing, investment advice, and related services; and diesel fuel. For the 12 months ended in August, prices for stage 1 intermediate demand rose 21.1 percent.

PPI to Publish Interim Index Values and Publish All Indexes to 3 Decimal Places

Effective with the release of November 2021 Producer Price Index (PPI) data, on December 14, 2021, the Bureau of Labor Statistics will publish interim index values for all preliminary PPI data, starting with values for August through October 2021. Within PPI, interim indexes are defined as recalculated indexes for the 3 months between the initial publication and final revision of PPI data. With this modification, data within the 3-month interim revision period will be updated and published on a monthly basis. This replaces the current policy of only publishing revised data once, when the data have been finalized 4 months after original publication. PPI data will continue to be finalized 4 months after initial publication.

The publication of interim index values will allow for greater transparency regarding PPI revisions, and will align PPI official index publication with Bureau of Economic Analysis use of PPI interim index data as an input to Gross Domestic Product calculations.

In addition, effective with the November 2021 data release in December 2021, the PPI will begin publishing index values to 3 decimal places of precision, starting with finalized data for July 2021. The publication of index levels to 3 decimal places will allow data users greater precision in percent change calculations. Published PPI percent change calculations will continue to be rounded to one decimal place. The change to 3 decimal precision for indexes will apply to all PPI data: Industry, Commodity, FD-ID, and Input indexes.

This change to the level of published precision will impact only the presentation of index numbers. Index values will continue to be calculated from underlying price information in the same manner as in the past, and no systematic upward or downward effect on the data will be introduced. With the implementation of this change, official PPI data prior to July 2021 will not be revised to reflect greater precision.

As a result of the publication of interim index values and index data to 3 decimal places of precision, effective with the publication of November 2021 PPI data in December 2021, PPI will introduce redesigned publication tables for both the PPI News Release and the PPI Detailed Report. For further information on these publication table changes see: www.bls.gov/ppi/notices/2021/ppi-to-publish-interim-index-values- to-3-decimal-places.htm,or contact the PPI Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691-7705.