July 2022 Producer Price Index

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The Producer Price Index for final demand fell 0.5 percent in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This decline followed advances of 1.0 percent in June and 0.8 percent in May. (See table A.) On an unadjusted basis, final demand prices moved up 9.8 percent for the 12 months ended in July.

In July, the decrease in the index for final demand is attributable to a 1.8-percent decline in prices for final demand goods. In contrast, the index for final demand services advanced 0.1 percent.

Prices for final demand less foods, energy, and trade services moved up 0.2 percent in July following a 0.3-percent rise in June. For the 12 months ended in July, the index for final demand less foods, energy, and trade services increased 5.8 percent.

Final Demand

Final demand goods: The index for final demand goods fell 1.8 percent in July, the largest decline since moving down 2.7 percent in April 2020. The July decrease can be traced to a 9.0-percent drop in prices for final demand energy. Conversely, the indexes for final demand foods and for final demand goods less foods and energy rose 1.0 percent and 0.2 percent, respectively.

Product detail: Eighty percent of the July decline in the index for final demand goods is attributable to gasoline prices, which fell 16.7 percent. The indexes for diesel fuel, gas fuels, oilseeds, iron and steel scrap, and grains also moved lower. In contrast, prices for chicken eggs jumped 43.1 percent. The indexes for industrial chemicals and for electric power also increased. (See table 2.)

Final demand services: The index for final demand services inched up 0.1 percent in July, the third consecutive increase. Leading the July advance, margins for final demand trade services rose 0.3 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services moved up 0.4 percent. Conversely, final demand services less trade, transportation, and warehousing decreased 0.1 percent.

Product detail: Leading the July increase in prices for final demand services, margins for fuels and lubricants retailing rose 12.3 percent. The indexes for services related to securities brokerage and dealing (partial), hospital outpatient care, automobiles and automobile parts retailing, and transportation of passengers (partial) also moved higher. In contrast, prices for portfolio management declined 7.9 percent. The indexes for securities brokerage, dealing, and investment advice; food and alcohol retailing; and long-distance motor carrying also fell.

Intermediate Demand by Commodity Type

Within intermediate demand in July, prices for processed goods decreased 2.3 percent, the index for unprocessed goods fell 12.4 percent, and prices for services advanced 0.1 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand fell 2.3 percent in July, the largest decline since moving down 3.4 percent in April 2020. Most of the broad-based decrease in July can be traced to a 9.0-percent drop in prices for processed energy goods. The indexes for processed materials less foods and energy and for processed foods and feeds also moved lower, 0.2 percent and 0.1 percent, respectively. For the 12 months ended in July, prices for processed goods for intermediate demand increased 17.4 percent.

Product detail: Over half of the July decline in the index for processed goods for intermediate demand is attributable to a 16.6-percent decrease in prices for diesel fuel. The indexes for gasoline; utility natural gas; cold rolled steel sheet and strip; liquefied petroleum gas; and shortening, cooking oil, and margarine also fell. Conversely, prices for industrial chemicals advanced 1.9 percent. The indexes for commercial electric power and for beef and veal also moved higher.

Unprocessed goods for intermediate demand: Prices for unprocessed goods for intermediate demand fell 12.4 percent, the largest decline since moving down 14.4 percent in April 2020. Most of the broad-based decrease in July is attributable to a 21.2-percent drop in the index for unprocessed energy goods. Prices for unprocessed nonfood materials less energy and for unprocessed foodstuffs and feedstuffs also declined, 6.9 percent and 0.8 percent, respectively. For the 12 months ended in July, the index for unprocessed goods for intermediate demand increased 27.5 percent.

Product detail: Over half of the July decrease in prices for unprocessed goods for intermediate demand can be traced to a 27.6-percent decline in the index for natural gas. Prices for crude petroleum, grains, iron and steel scrap, oilseeds, and nonferrous metal ores also fell. In contrast, the index for slaughter hogs jumped 23.2 percent. Prices for coal and for recyclable paper also rose.

Services for intermediate demand: The index for services for intermediate demand edged up 0.1 percent in July after a 0.3-percent decline in June. Leading the increase, prices for transportation and warehousing services for intermediate demand rose 0.9 percent. The index for services less trade, transportation, and warehousing for intermediate demand moved up 0.1 percent. Conversely, margins for trade services for intermediate demand decreased 0.4 percent. For the 12 months ended in July, the index for services for intermediate demand advanced 5.7 percent.

Product detail: Within the index for services for intermediate demand in July, prices for courier, messenger, and U.S. postal services rose 2.2 percent. The indexes for business loans (partial), services related to securities brokerage and dealing (partial), fuels and lubricants retailing, and bundled wired telecommunications access services also advanced. In contrast, margins for machinery and equipment parts and supplies wholesaling decreased 1.6 percent. Prices for portfolio management; securities brokerage, dealing, and investment advice; and for services related to air transportation also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand fell 0.6 percent in July, the first decline since dropping 1.7 percent in April 2020. In July, the index for total goods inputs to stage 4 intermediate demand decreased 0.9 percent, and prices for total services inputs moved down 0.4 percent. (See table D.) Declines in the indexes for gasoline; portfolio management; diesel fuel; machinery and equipment parts and supplies wholesaling; grains; and securities brokerage, dealing, and investment advice outweighed increases in prices for services related to securities brokerage and dealing (partial), business loans (partial), and beef and veal. For the 12 months ended in July, the index for stage 4 intermediate demand rose 8.9 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand declined 1.2 percent in July, the first decrease since a 5.4-percent drop in April 2020. In July, prices for total goods inputs to stage 3 intermediate demand fell 2.6 percent. Conversely, the index for total services inputs advanced 0.3 percent. Declining prices for diesel fuel, grains, gasoline, jet fuel, cold rolled steel sheet and strip, and services related to air transportation outweighed increases in the indexes for business loans (partial), slaughter hogs, and ungraded chicken eggs. For the 12 months ended in July, prices for stage 3 intermediate demand rose 15.4 percent.

Stage 2 intermediate demand: Prices for stage 2 intermediate demand declined 6.1 percent in July, the largest decrease since the index entered calculation in December 2009. In July, prices for total goods inputs to stage 2 intermediate demand dropped 11.9 percent. In contrast, the index for total services inputs advanced 0.8 percent. Falling prices for gas fuels, crude petroleum, oilseeds, iron and steel scrap, nonferrous metal ores, and portfolio management outweighed increases in the indexes for business loans (partial), fuels and lubricants retailing, and industrial chemicals. For the 12 months ended in July, prices for stage 2 intermediate demand rose 15.6 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand declined 1.7 percent in July, the largest decrease since a 4.3-percent drop in April 2020. In July, prices for total goods inputs to stage 1 intermediate demand fell 3.0 percent, and the index for total services inputs moved down 0.1 percent. Declining prices for diesel fuel; utility natural gas; grains; gasoline; portfolio management; and securities brokerage, dealing, and investment advice outweighed increases in the indexes for services related to securities brokerage and dealing (partial); industrial chemicals; and courier, messenger, and U.S. postal services. For the 12 months ended in July, prices for stage 1 intermediate demand advanced 12.2 percent.