December 2022 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 declined 0.5 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.2 percent in November and 0.4 percent in October. (See table A.) On an unadjusted basis, the index for final demand increased 6.2 percent in 2022 after rising 10.0 percent in 2021.

In December, the decrease in the final demand index can be attributed to a 1.6-percent decline in prices for final demand goods. In contrast, the index for final demand services rose 0.1 percent.

Prices for final demand less foods, energy, and trade services edged up 0.1 percent in December after increasing 0.3 percent in November. The index for final demand less foods, energy, and trade services advanced 4.6 percent in 2022 following a 7.0-percent rise in 2021.

Final Demand

Final demand goods: Prices for final demand goods moved down 1.6 percent in December, the largest decrease since falling 1.8 percent in July. Leading the December decline, the index for final demand energy dropped 7.9 percent. Prices for final demand foods decreased 1.2 percent. Conversely, the index for final demand goods less foods and energy advanced 0.2 percent.

Product detail: Nearly half of the December decrease in the index for final demand goods can be traced to a 13.4-percent decline in prices for gasoline. The indexes for diesel fuel; jet fuel; fresh and dry vegetables; canned, cooked, smoked, or prepared poultry; and basic organic chemicals also fell. In contrast, prices for carbon steel scrap increased 8.3 percent. The indexes for chicken eggs and for electric power also moved higher. (See table 2.)

Final demand services: Prices for final demand services edged up 0.1 percent in December after rising 0.2 percent in November. The December increase can be traced to margins for final demand trade services, which advanced 0.3 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Conversely, the index for final demand transportation and warehousing services fell 0.2 percent, while prices for final demand services less trade, transportation, and warehousing were unchanged.

Product detail: A major factor in the December increase in prices for final demand services was a 17.6-percent jump in margins for fuels and lubricants retailing. The indexes for deposit services (partial), airline passenger services, inpatient care, and professional and commercial equipment wholesaling also moved higher. In contrast, prices for truck transportation of freight decreased 1.7 percent. The indexes for residential real estate loans (partial), machinery and vehicle wholesaling, and guestroom rental also fell.

Intermediate Demand by Commodity Type

Within intermediate demand in December, prices for processed goods decreased 2.8 percent, the index for unprocessed goods rose 3.4 percent, and prices for services increased 0.4 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved down 2.8 percent in December, the largest decline since falling 3.4 percent in April 2020. Over 80 percent of the broad-based decrease in December is attributable to prices for processed energy goods, which dropped 10.9 percent. The indexes for processed materials less foods and energy and for processed foods and feeds also moved down, 0.5 percent and 0.8 percent, respectively. In 2022, prices for processed goods for intermediate demand increased 4.7 percent after jumping 24.4 percent in 2021.

Product detail: Nearly two-thirds of the December decline in the index for processed goods for intermediate demand can be traced to a 27.0-percent drop in prices for diesel fuel. The indexes for gasoline; basic organic chemicals; jet fuel; asphalt; and canned, cooked, smoked, or prepared poultry also moved lower. Conversely, prices for electric power advanced 1.0 percent. The indexes for beef and veal and for primary nonferrous metals also increased.

Unprocessed goods for intermediate demand: Prices for unprocessed goods for intermediate demand rose 3.4 percent in December following three consecutive declines. Leading the increase, the index for unprocessed energy materials advanced 9.5 percent. Prices for unprocessed nonfood materials less energy moved up 0.6 percent. In contrast, the index for unprocessed foodstuffs and feedstuffs fell 1.5 percent. In 2022, prices for unprocessed goods for intermediate demand moved up 11.7 percent following a 40.0-percent jump in 2021.

Product detail: A major factor in the increase in prices for unprocessed goods for intermediate demand was the index for natural gas, which surged 45.3 percent. Prices for ungraded chicken eggs, carbon steel scrap, hay and hayseeds, slaughter turkeys, and aluminum base scrap also moved up. Conversely, the index for grains declined 5.9 percent. Prices for crude petroleum and for raw cotton also decreased.

Services for intermediate demand: The index for services for intermediate demand rose 0.4 percent in December, the sixth consecutive increase. Over 70 percent of the December advance can be attributed to prices for services less trade, transportation, and warehousing for intermediate demand, which moved up 0.5 percent. The index for trade services for intermediate demand increased 0.6 percent. In contrast, prices for transportation and warehousing services for intermediate demand fell 0.1 percent. In 2022, the index for services for intermediate demand rose 6.4 percent following an 8.3-percent advance in 2021.

Product detail: Over 40 percent of the December rise in the index for services for intermediate demand can be traced to a 16.4-percent increase in prices for deposit services (partial). The indexes for fuels and lubricants retailing, business loans (partial), gross rents for retail properties, paper and plastics products wholesaling, and airline passenger services also advanced. Conversely, prices for truck transportation of freight fell 1.7 percent. The indexes for investment banking and for chemicals and allied products wholesaling also decreased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand declined 0.3 percent in December following four consecutive increases. In December, the index for total goods inputs to stage 4 intermediate demand fell 0.9 percent. In contrast, prices for total services inputs rose 0.3 percent. (See table D.) Decreases in the indexes for diesel fuel; gasoline; grains; strawberries; canned, cooked, smoked, or prepared poultry; and portfolio management outweighed increases in prices for deposit services (partial), gross rents for retail properties, and electric power. In 2022, the index for stage 4 intermediate demand moved up 6.0 percent after rising 12.6 percent in 2021.

Stage 3 intermediate demand: The index for stage 3 intermediate demand declined 2.1 percent in December, the largest decrease since dropping 5.4 percent in April 2020. In December, prices for total goods inputs to stage 3 intermediate demand fell 4.5 percent. Conversely, the index for total services inputs rose 0.3 percent. Decreases in prices for diesel fuel, jet fuel, slaughter chickens, grains, raw milk, and truck transportation of freight outweighed advances in the indexes for deposit services (partial), ungraded chicken eggs, and hay and hayseeds. In 2022, prices for stage 3 intermediate demand increased 4.9 percent after jumping 20.8 percent in 2021.

Stage 2 intermediate demand: Prices for stage 2 intermediate demand advanced 2.2 percent in December following three consecutive declines. In December, the index for total goods inputs to stage 2 intermediate demand rose 3.5 percent, and prices for total services inputs increased 1.1 percent. Advances in the indexes for natural gas, deposit services (partial), fuels and lubricants retailing, business loans (partial), carbon steel scrap, and aluminum base scrap outweighed declines in prices for crude petroleum, basic organic chemicals, and guestroom rental. In 2022, the index for stage 2 intermediate demand rose 8.7 percent after jumping 21.6 percent in 2021.

Stage 1 intermediate demand: The index for stage 1 intermediate demand declined 1.7 percent in December, the largest decrease since falling 1.9 percent in July. In December, prices for total goods inputs to stage 1 intermediate demand dropped 3.2 percent. The index for total services inputs was unchanged. Decreases in prices for diesel fuel, basic organic chemicals, gasoline, grains, guestroom rental, and investment banking outweighed increases in the indexes for gross rents for retail properties, fuels and lubricants retailing, and carbon steel scrap. In 2022, prices for stage 1 intermediate demand advanced 5.5 percent following a 17.8-percent rise in 2021.

Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 14, 2023

Each year with the release of PPI data for January, seasonal adjustment factors and relative importance figures are recalculated to reflect price movements from the just-completed calendar year. The following information relating to the seasonal-factor update will be available on February 14, 2023 (2 workdays prior to the release of PPI data for January 2023 on February 16, 2023):

* Direct seasonal factors for PPI commodity indexes for the year 2023, * Recalculated seasonal factors for the last 5 years (2018-2022) for PPI commodity indexes, * Recalculated seasonal factors for the last 5 years (2018-2022) for PPI Final Demand- Intermediate Demand indexes, * Recalculated seasonal index data for the last 5 years (2018-2022) for Final Demand- Intermediate Demand and commodity indexes. This revision to seasonally adjusted indexes for the previous 5 years will be posted to the PPI database on the BLS website.

In addition, the following relative importance tables, which include values for December 2022, will be available on February 14, 2023:

* Final demand by individual commodities * Final demand by component series * Individual commodities of intermediate demand by commodity type * Component series of intermediate demand by commodity type * Individual commodities of intermediate demand by production flow * Component series of intermediate demand by production flow * Commodities, all levels * Wherever-provided services and construction

This information will be available on the PPI website at www.bls.gov/ppi or by contacting the PPI Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691-7705.

PPI Weights to be Updated to Reflect 2017 Census Shipment Values

With the release of January 2023 Producer Price Index (PPI) data on February 16, 2023, the Bureau of Labor Statistics will update PPI value weights to more accurately reflect recent production and marketing patterns. The updated weights will be constructed using 2017 value of shipments data from the Census of Manufactures, the Census of Mining, the Census of Services, and the Census of Agriculture. These data were collected in accordance with the North American Product Classification System (NAPCS). From January 2018 through December 2022, PPI weights have been based on 2012 North American Industry Classification System (NAICS) shipment values.

All PPIs will be affected by this weight update, including all industry net output indexes, as well as indexes for traditional commodity groupings. In addition, weights will be updated from the 2012 to the 2017 Economic Census for all Final Demand-Intermediate Demand (FD-ID) indexes, special commodity-grouping indexes, and inputs to industry indexes. This weight revision will not result in changes to the reference base for indexes, the dates when PPIs are set to 100.

It is important to note that the basic structures of the PPI commodity and FD-ID classification systems will not change as a result of the weight revision. However, PPIs classified according to the NAICS will be updated to reflect 2022 NAICS definitions established by the U.S. Census Bureau. The weight update also will result in shifting relative importance values. These shifts will impact aggregate indexes in a manner commensurate with the relative gains and losses in value weights from 2012 to 2017.

In addition, PPI sample updates normally occurring with the release of October 2022 and February 2023 data will be combined and released in conjunction with the release of January 2023 PPI data in February 2023.