August 2023 Producer Price Index

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The Producer Price Index for final demand increased 0.7 percent in August, seasonally adjusted, after rising 0.4 percent in July, the U.S. Bureau of Labor Statistics reported today. (See table A.) The August advance is the largest increase in final demand prices since moving up 0.9 percent in June 2022. On an unadjusted basis, the index for final demand rose 1.6 percent for the 12 months ended in August.

In August, 80 percent of the rise in final demand prices is attributable to a 2.0-percent jump in the index for final demand goods. Prices for final demand services advanced 0.2 percent.

The index for final demand less foods, energy, and trade services increased 0.3 percent in August, the same as in July. For the 12 months ended in August, prices for final demand less foods, energy, and trade services rose 3.0 percent, the largest advance since moving up 3.4 percent for the 12 months ended in April.

Final Demand

Final demand goods: The index for final demand goods jumped 2.0 percent in August, the largest advance since increasing 2.1 percent in June 2022. The August rise is mostly attributable to prices for final demand energy, which surged 10.5 percent. The index for final demand goods less foods and energy edged up 0.1 percent. In contrast, prices for final demand foods declined 0.5 percent.

Product detail: Over 60 percent of the August rise in the index for final demand goods can be traced to prices for gasoline, which jumped 20.0 percent. The indexes for diesel fuel, jet fuel, home heating oil, beverages and beverage materials, and iron and steel scrap also moved higher. Conversely, prices for fresh and dry vegetables fell 11.5 percent. The indexes for residential electric power and for industrial chemicals also decreased. (See table 2.)

Final demand services: The index for final demand services rose 0.2 percent in August after increasing 0.5 percent in July. Leading the advance in August, prices for final demand services less trade, transportation, and warehousing moved up 0.3 percent. The index for final demand transportation and warehousing services jumped 1.4 percent. In contrast, margins for final demand trade services declined 0.3 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: A 1.1-percent increase in the index for residential real estate services (partial) was a major factor in the August rise in prices for final demand services. The indexes for truck transportation of freight; machinery, equipment, parts, and supplies wholesaling; automotive fuels and lubricants retailing; services related to securities brokerage and dealing (partial); and residential real estate loans (partial) also moved higher. Conversely, margins for chemicals and allied products wholesaling fell 4.7 percent. The indexes for food wholesaling and for deposit services (partial) also decreased.

Intermediate Demand by Commodity Type

Within intermediate demand in August, prices for processed goods advanced 2.1 percent, the index for unprocessed goods rose 1.3 percent, and prices for services edged up 0.1 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand increased 2.1 percent in August, the largest advance since moving up 2.2 percent in May 2022. Leading the August rise, prices for processed energy goods jumped 12.1 percent. The index for processed foods and feeds increased 0.7 percent. In contrast, prices for processed materials less foods and energy declined 0.3 percent. For the 12 months ended in August, the index for processed goods for intermediate demand fell 4.3 percent.

Product detail: Over 70 percent of the August rise in prices for processed goods for intermediate demand can be traced to a 41.1-percent jump in the index for diesel fuel. Prices for gasoline; jet fuel; natural, processed, and imitation cheese; fats and oils; and for particleboard and fiberboard also advanced. Conversely, the index for industrial chemicals decreased 1.2 percent. Prices for thermoplastic resins and materials and for beef and veal also declined.

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand moved up 1.3 percent in August after rising 2.4 percent in July. Leading the August increase, prices for unprocessed energy materials advanced 5.4 percent. The index for unprocessed nonfood materials less energy rose 0.8 percent. In contrast, prices for unprocessed foodstuffs and feedstuffs fell 2.3 percent. For the 12 months ended in August, the index for unprocessed goods for intermediate demand dropped 26.9 percent.

Product detail: A major factor in the advance in prices for unprocessed goods for intermediate demand was the index for crude petroleum, which rose 8.9 percent. Prices for iron and steel scrap, slaughter steers and heifers, slaughter chickens, slaughter sows, and raw cotton also increased. Conversely, the index for hay, hayseeds, and oilseeds fell 6.3 percent. Prices for natural gas and for corn also declined.

Services for intermediate demand: The index for services for intermediate demand edged up 0.1 percent in August after rising 0.5 percent in July. The August advance is attributable to a 0.3- percent increase 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 declined 0.3 percent and 0.2 percent, respectively. For the 12 months ended in August, prices for services for intermediate demand moved up 4.2 percent.

Product detail: Leading the August increase in the index for services for intermediate demand, prices for nonresidential real estate services advanced 2.9 percent. The indexes for transportation of freight and mail; services related to securities brokerage and dealing (partial); machinery and equipment parts and supplies wholesaling; and hardware, building materials, and supplies retailing also rose. Conversely, margins for chemicals and allied products wholesaling fell 4.7 percent. The indexes for arrangement of freight and cargo transportation, television advertising time sales, and business loans (partial) also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand rose 0.6 percent in August, the largest advance since moving up 1.0 percent in January. In August, the index for total goods inputs to stage 4 intermediate demand increased 0.6 percent, and prices for total services inputs climbed 0.5 percent. (See table D.) Advances in the indexes for diesel fuel, nonresidential real estate services, gasoline, machinery and equipment parts and supplies wholesaling, services related to securities brokerage and dealing (partial), and transportation of freight and mail outweighed declines in the indexes for chemicals and allied products wholesaling; business loans (partial); and hay, hayseeds, and oilseeds. For the 12 months ended in August, prices for stage 4 intermediate demand increased 2.3 percent, the largest 12-month rise since moving up 2.7 percent in April.

Stage 3 intermediate demand: The index for stage 3 intermediate demand increased 0.9 percent in August, the largest advance since rising 1.7 percent in May 2022. In August, prices for total goods inputs to stage 3 intermediate demand jumped 2.5 percent. Conversely, the index for total services inputs fell 0.5 percent. Advancing prices for diesel fuel, jet fuel, gasoline, transportation of freight and mail, nonresidential real estate services, and slaughter steers and heifers outweighed decreases in the indexes for television advertising time sales, arrangement of freight and cargo transportation, and raw milk. For the 12 months ended in August, prices for stage 3 intermediate demand moved down 4.5 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand rose 0.7 percent in August after advancing 1.7 percent in July. In August, prices for total goods inputs to stage 2 intermediate demand increased 2.2 percent. In contrast, the index for total services inputs fell 0.4 percent. Advances in the indexes for crude petroleum, iron and steel scrap, diesel fuel, liquefied petroleum gas, automotive fuels and lubricants retailing, and machinery and equipment parts and supplies wholesaling outweighed decreasing prices for arrangement of freight and cargo transportation, natural gas, and business loans (partial). For the 12 months ended in August, the index for stage 2 intermediate demand dropped 10.1 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand increased 1.6 percent in August, the largest advance since moving up 1.6 percent in April 2022. In August, prices for total goods inputs to stage 1 intermediate demand rose 2.5 percent, and prices for total services inputs climbed 0.6 percent. Increases in the indexes for diesel fuel; nonresidential real estate services; gasoline; services related to securities brokerage and dealing (partial); transportation of freight and mail; and hardware, building materials, and supplies retailing outweighed decreases in the indexes for chemicals and allied products wholesaling; metals, minerals, and ores wholesaling; and industrial chemicals. For the 12 months ended in August, prices for stage 1 intermediate demand declined 1.0 percent.