May 2023 Producer Price Index

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The Producer Price Index for final demand declined 0.3 percent in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.2 percent in April and fell 0.4 percent in March. (See table A.) On an unadjusted basis, the index for final demand moved up 1.1 percent for the 12 months ended in May.

In May, the decline in the final demand index can be traced to prices for final demand goods, which fell 1.6 percent. The index for final demand services increased 0.2 percent.

Prices for final demand less foods, energy, and trade services were unchanged in May after inching up 0.1 percent in April. For the 12 months ended in May, the index for final demand less foods, energy, and trade services increased 2.8 percent.

Final Demand

Final demand goods: Prices for final demand goods moved down 1.6 percent in May, the largest decrease since falling 1.6 percent in July 2022. Most of the May decline is attributable to the index for final demand energy, which dropped 6.8 percent. Prices for final demand foods moved down 1.3 percent. In contrast, the index for final demand goods less foods and energy increased 0.1 percent.

Product detail: Sixty percent of the May decline in the index for final demand goods can be traced to a 13.8-percent drop in prices for gasoline. The indexes for diesel fuel, chicken eggs, jet fuel, fresh and dry vegetables, and iron and steel scrap also fell. Conversely, prices for tobacco products advanced 1.7 percent. The indexes for electric power and for beverages and beverage materials also increased. (See table 2.)

Final demand services: The index for final demand services moved up 0.2 percent in May following a 0.3- percent advance in April. Leading the May increase, margins for final demand trade services rose 1.0 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing edged up 0.1 percent. In contrast, the index for final demand transportation and warehousing services declined 1.4 percent.

Product detail: Over 40 percent of the May increase in prices for final demand services can be attributed to margins for automobiles and automobile parts retailing, which rose 4.2 percent. The indexes for fuels and lubricants retailing; apparel, footwear, and accessories retailing; securities brokerage, dealing, investment advice, and related services; machinery and vehicle wholesaling; and food wholesaling also advanced. Conversely, prices for truck transportation of freight fell 2.1 percent. The indexes for portfolio management and for health, beauty, and optical goods retailing also decreased.

Intermediate Demand by Commodity Type

Within intermediate demand in May, the index for processed goods fell 1.5 percent, prices for unprocessed goods dropped 4.8 percent, and the index for services advanced 0.2 percent. (See tables B and C.)

Processed goods for intermediate demand: Prices for processed goods for intermediate demand moved down 1.5 percent in May, the largest decrease since falling 2.5 percent in December 2022. Most of the May decline can be traced to a 6.9-percent drop in the index for processed energy goods. Prices for processed foods and feeds decreased 1.9 percent, while the index for processed materials less foods and energy was unchanged. For the 12 months ended in May, prices for processed goods for intermediate demand fell 7.1 percent, the largest 12-month decline since moving down 7.2 percent in May 2020.

Product detail: In May, over 40 percent of the decrease in prices for processed goods for intermediate demand can be traced to the index for diesel fuel, which dropped 13.7 percent. Prices for gasoline, natural gas to electric utilities, jet fuel, primary basic organic chemicals, and prepared animal feeds also fell. Conversely, the index for commercial electric power rose 1.8 percent. Prices for cold rolled steel sheet and strip and for snack chips also advanced.

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand fell 4.8 percent in May after increasing 1.6 percent in April. Almost 60 percent of the broad- based decrease is attributable to a 7.8-percent drop in prices for unprocessed energy materials. The indexes for unprocessed foodstuffs and feedstuffs and for unprocessed nonfood materials less energy also moved lower, falling 3.0 percent and 3.3 percent, respectively. For the 12 months ended in May, prices for unprocessed goods for intermediate demand declined 27.5 percent, the largest 12-month decrease since dropping 28.6 percent in April 2020.

Product detail: Nearly 60 percent of the May decline in the index for unprocessed goods for intermediate demand can be traced to prices for crude petroleum, which fell 10.2 percent. The indexes for ungraded chicken eggs, corn, iron and steel scrap, slaughter hogs, and natural gas also moved lower. In contrast, raw milk prices increased 4.8 percent. The indexes for coal and for aluminum base scrap also moved higher.

Services for intermediate demand: The index for services for intermediate demand advanced 0.2 percent in May after moving up 0.7 percent in April. A major factor in the May increase was a 0.4- percent rise in prices for services less trade, transportation, and warehousing for intermediate demand. Margins for trade services for intermediate demand advanced 0.2 percent. Conversely, the index for transportation and warehousing services for intermediate demand decreased 0.9 percent. For the 12 months ended in May, prices for services for intermediate demand increased 3.9 percent.

Product detail: Leading the May advance in the index for services for intermediate demand, prices for business loans (partial) rose 3.2 percent. The indexes for securities brokerage, dealing, investment advice, and related services; food wholesaling; fuels and lubricants retailing; investment banking; and ground courier and messenger services also moved higher. In contrast, prices for truck transportation of freight fell 2.1 percent. The indexes for portfolio management and for machinery and equipment parts and supplies wholesaling also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand decreased 0.2 percent in May after increasing 0.4 percent in April. In May, the index for total goods inputs to stage 4 intermediate demand moved down 0.6 percent. Conversely, prices for total services inputs edged up 0.1 percent. (See table D.) Decreases in the indexes for gasoline; diesel fuel; portfolio management; machinery and equipment parts and supplies wholesaling; warehousing, storage, and related services; and grains outweighed rising prices for securities brokerage, dealing, investment advice, and related services; business loans (partial); and commercial electric power. For the 12 months ended in May, the index for stage 4 intermediate demand advanced 1.5 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand declined 1.0 percent in May, the fourth consecutive decrease. In May, prices for total goods inputs to stage 3 intermediate demand fell 2.4 percent. In contrast, the index for total services inputs inched up 0.1 percent. Declines in prices for diesel fuel; ungraded chicken eggs; jet fuel; grains; gasoline; and warehousing, storage, and related services outweighed increases in the indexes for business loans (partial), raw milk, and asphalt. For the 12 months ended in May, prices for stage 3 intermediate demand fell 6.5 percent, the largest 12-month decrease since dropping 8.1 percent in May 2020.

Stage 2 intermediate demand: The index for stage 2 intermediate demand declined 1.4 percent in May after rising 1.3 percent in April. In May, prices for total goods inputs to stage 2 intermediate demand moved down 4.0 percent. Conversely, the index for total services inputs advanced 0.6 percent. Falling prices for crude petroleum, gas fuels, iron and steel scrap, prepared animal feeds, broadcast and network television advertising time sales, and primary basic organic chemicals outweighed increases in the indexes for business loans (partial), fuels and lubricants retailing, and coal. For the 12 months ended in May, prices for stage 2 intermediate demand decreased 9.8 percent, the largest 12-month decline since dropping 10.3 percent in April 2020.

Stage 1 intermediate demand: The index for stage 1 intermediate demand declined 0.9 percent in May, the largest decrease since moving down 1.8 percent in December 2022. In May, prices for total goods inputs to stage 1 intermediate demand fell 1.8 percent, while the index for total services inputs was unchanged. Decreasing prices for diesel fuel, gasoline, natural gas to electric utilities, grains, iron and steel scrap, and truck transportation of freight outweighed advances in the indexes for securities brokerage, dealing, investment advice, and related services; residual fuels; and commercial electric power. For the 12 months ended in May, prices for stage 1 intermediate demand declined 3.6 percent, the largest 12-month decrease since dropping 4.5 percent in July 2020.