February 2023 Producer Price Index

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The Producer Price Index for Final Demand decreased 0.1 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.3 percent in January and declined 0.2 percent in December 2022. (See table A.) On an unadjusted basis, the final demand index rose 4.6 percent for the 12 months ended in February.

In February, the decline in the final demand index was led by prices for final demand goods, which fell 0.2 percent. The index for final demand services edged down 0.1 percent.

The index for final demand less foods, energy, and trade services increased 0.2 percent in February after rising 0.5 percent in January. For the 12 months ended in February, prices for final demand less foods, energy, and trade services advanced 4.4 percent.

Final demand goods: The index for final demand goods fell 0.2 percent in February following a 1.2- percent advance in January. A 2.2-percent decline in prices for final demand foods was a major factor in the February decrease. The index for final demand energy moved down 0.2 percent. In contrast, prices for final demand goods less foods and energy rose 0.3 percent.

Product detail: Over 80 percent of the February decline in the index for final demand goods can be attributed to a 36.1-percent drop in prices for chicken eggs. The indexes for residential natural gas, fresh and dry vegetables, diesel fuel, home heating oil, and primary basic organic chemicals also fell. Conversely, prices for iron and steel scrap advanced 10.6 percent. The indexes for gasoline and for sugar and confectionery products also increased. (See table 2.)

Final demand services: The index for final demand services inched down 0.1 percent in February, the same as in January. Leading the February decline, margins for final demand trade services fell 0.8 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services decreased 1.1 percent. In contrast, the index for final demand services less trade, transportation, and warehousing advanced 0.3 percent.

Product detail: A major factor in the February decrease in prices for final demand services was margins for machinery and vehicle wholesaling, which fell 3.9 percent. The indexes for chemicals and allied products wholesaling, automobiles and automobile parts retailing, guestroom rental, and airline passenger services also declined. Conversely, prices for outpatient care (partial) rose 0.5 percent. The indexes for food and alcohol retailing; securities brokerage, dealing, investment advice, and related services; and loan services (partial) also increased.

Intermediate Demand by Commodity Type

Within intermediate demand in February, prices for processed goods fell 0.4 percent, the index for unprocessed goods declined 3.8 percent, and prices for services increased 0.3 percent. (See tables B and C.)

Processed goods for intermediate demand: Prices for processed goods for intermediate demand moved down 0.4 percent in February following a 1.1-percent increase in January. Over three-quarters of the decrease can be traced to the index for processed energy goods, which fell 1.6 percent. Prices for processed foods and feeds declined 1.9 percent. In contrast, the index for processed materials less foods and energy advanced 0.1 percent. For the 12 months ended in February, prices for processed goods for intermediate demand rose 2.1 percent.

Product detail: Over half of the February decline in the index for processed goods for intermediate demand can be attributed to prices for diesel fuel, which fell 4.7 percent. The indexes for industrial electric power, primary basic organic chemicals, agricultural chemicals and chemical products, commercial natural gas, and steel pipe and tube also moved lower. Conversely, prices for thermoplastic resins and materials rose 1.8 percent. The indexes for gasoline and for sugar and confectionery products also moved higher.

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand fell 3.8 percent in February following a 6.3-percent decrease in January. Leading the February decline, prices for unprocessed energy materials moved down 9.1 percent. The index for unprocessed foodstuffs and feedstuffs fell 1.1 percent. In contrast, prices for unprocessed nonfood materials less energy advanced 1.2 percent. For the 12 months ended in February, the index for unprocessed goods for intermediate demand decreased 10.9 percent, the first 12-month decline since October 2020.

Product detail: A major factor in the decrease in prices for unprocessed goods for intermediate demand was the index for natural gas, which dropped 41.4 percent. Prices for ungraded chicken eggs, raw milk, fresh fruits and melons, fresh vegetables (except potatoes), and slaughter cattle also declined. Conversely, the index for iron and steel scrap increased 10.6 percent. Prices for crude petroleum and for slaughter chickens also advanced.

Services for intermediate demand: The index for services for intermediate demand moved up 0.3 percent in February following a 0.7-percent increase in January. The February advance can be traced to a 0.6-percent rise in prices for services less trade, transportation, and warehousing for intermediate demand. In contrast, the indexes for trade services for intermediate demand and for transportation and warehousing services for intermediate demand fell 0.7 percent and 0.2 percent, respectively. For the 12 months ended in February, prices for services for intermediate demand increased 6.0 percent.

Product detail: Leading the advance in the index for services for intermediate demand, prices for loan services (partial) rose 8.3 percent. The indexes for securities brokerage, dealing, investment advice, and related services; legal services; staffing services; warehousing, storage, and related services; and gross rents for office buildings also moved higher. Conversely, margins for chemicals and allied products wholesaling decreased 5.7 percent. Prices for gross rents for retail properties and for arrangement of freight and cargo transportation also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand was unchanged in February after increasing 0.9 percent in January. In February, prices for total services inputs to stage 4 intermediate demand edged up 0.1 percent, while the index for total goods inputs was unchanged. (See table D.) Advances in prices for loan services (partial); securities brokerage, dealing, investment advice, and related services; gasoline; warehousing, storage, and related services; and gross rents for office buildings offset decreases in the indexes for gross rents for retail properties, chemicals and allied products wholesaling, industrial electric power, machinery and equipment parts and supplies wholesaling, and diesel fuel. For the 12 months ended in February, prices for stage 4 intermediate demand moved up 4.8 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand decreased 0.2 percent in February after inching up 0.1 percent in January. In February, prices for total goods inputs to stage 3 intermediate demand declined 0.7 percent. In contrast, the index for total services inputs rose 0.2 percent. Falling prices for raw milk, television advertising time sales, diesel fuel, ungraded chicken eggs, gross rents for retail properties, and primary basic organic chemicals outweighed increases in the indexes for loan services (partial), slaughter chickens, and staffing services. For the 12 months ended in February, prices for stage 3 intermediate demand advanced 2.3 percent.

Stage 2 intermediate demand: Prices for stage 2 intermediate demand fell 1.0 percent in February following a 1.9-percent decline in January. In February, the index for total goods inputs to stage 2 intermediate demand dropped 3.7 percent. Conversely, prices for total services inputs moved up 1.2 percent. Decreases in the indexes for natural gas, chemicals and allied products wholesaling, deposit services (partial), primary basic organic chemicals, food wholesaling, and arrangement of freight and cargo transportation outweighed rising prices for loan services (partial), crude petroleum, and iron and steel scrap. For the 12 months ended in February, the index for stage 2 intermediate demand moved down 1.0 percent, the first 12-month decline since October 2020.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand decreased 0.4 percent in February after rising 0.7 percent in January. In February, the index for total goods inputs to stage 1 intermediate demand moved down 0.6 percent, and prices for total services inputs fell 0.3 percent. Declines in the indexes for diesel fuel, gross rents for retail properties, chemicals and allied products wholesaling, primary basic organic chemicals, industrial electric power, and agricultural chemicals and chemical products outweighed increases in prices for securities brokerage, dealing, and investment advice; iron and steel scrap; and gasoline. For the 12 months ended in February, the index for stage 1 intermediate demand advanced 3.6 percent.