March sees Increase in Producer Price Index (PPI) in Large Part due to Gas Price Increases

The Producer Price Index for final demand rose 0.6 percent in March, seasonally adjusted, the
U.S. Bureau of Labor Statistics reported today. Final demand prices edged up 0.1 percent in
February and decreased 0.1 percent in January. On an unadjusted basis, the final
demand index increased 2.2 percent for the 12 months ended in March, the largest 12-month rise
since a 2.5-percent advance in December 2018.

In March, over 60 percent of the increase in the index for final demand can be traced to a 1.0-
percent advance in prices for final demand goods. The index for final demand services moved up
0.3 percent.

The index for final demand less foods, energy, and trade services was unchanged in March
following a 0.1-percent advance in February. For the 12 months ended in March, prices for final
demand less foods, energy, and trade services rose 2.0 percent.

Final demand

Final demand goods: The index for final demand goods moved up 1.0 percent in March, the largest
advance since a 1.0-percent rise in May 2015. In March, over 80 percent of the broad-based increase
can be traced to prices for final demand energy, which jumped 5.6 percent. The index for final
demand goods less foods and energy rose 0.2 percent. Prices for final demand foods advanced 0.3
percent.

Product detail: Over 60 percent of the increase in the index for final demand goods is attributable to
a 16.0-percent jump in gasoline prices. The indexes for diesel fuel, fresh and dry vegetables,
cigarettes, beverages and beverage materials, and residential electric power also moved higher. In
contrast, prices for pork declined 8.7 percent. The indexes for light motor trucks and liquefied
petroleum gas also decreased.

Final demand services: Prices for final demand services rose 0.3 percent in March after no change
in February. The increase is attributable to the index for final demand trade services, which advanced
1.1 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)
Conversely, prices for final demand transportation and warehousing services declined 0.8 percent.
The index for final demand less trade, transportation, and warehousing was unchanged.

Product detail: Nearly a third of the increase in the index for final demand services can be traced to
margins for apparel, jewelry, footwear, and accessories retailing, which rose 4.2 percent. The indexes
for machinery, equipment, parts, and supplies wholesaling; deposit services (partial); food and
alcohol retailing; health, beauty, and optical goods retailing; and portfolio management also
advanced. In contrast, prices for long-distance motor carrying fell 1.2 percent. The indexes for fuels
and lubricants retailing and for residential real estate loans (partial) also declined.

Intermediate Demand by Commodity Type

Within intermediate demand in March, prices for processed goods rose 0.8 percent, the index for
unprocessed goods advanced 2.3 percent, and prices for services moved up 0.4 percent.

Processed goods for intermediate demand: The index for processed goods for intermediate
demand climbed 0.8 percent in March following a 0.4-percent rise in February. The March increase
was the result of a 4.3-percent advance in prices for processed energy goods. Conversely, the index
for processed foods and feeds fell 0.3 percent. Prices for processed materials less foods and energy
were unchanged. For the 12 months ended in March, the index for processed goods for intermediate
demand climbed 1.3 percent.

Product detail: In March, nearly 60 percent of the rise in the index for processed goods for
intermediate demand is attributable to a 12.6-percent jump in diesel fuel prices. The indexes for
gasoline, jet fuel, primary basic organic chemicals, residual fuels, and natural cheese (except cottage
cheese) also moved higher. In contrast, prices for pork fell 8.7 percent. The indexes for natural gas to
electric utilities and for plastic resins and materials also declined. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate
demand advanced 2.3 percent following two consecutive decreases. Most of the increase can be
traced to a 7.3-percent rise in prices for unprocessed energy materials. The index for unprocessed
nonfood materials less energy moved up 1.2 percent. Conversely, prices for unprocessed foodstuffs
and feedstuffs fell 2.3 percent. For the 12 months ended in March, the index for unprocessed goods
for intermediate demand declined 3.5 percent.

Product detail: Leading the March increase in the index for unprocessed goods for intermediate
demand, prices for crude petroleum jumped 15.3 percent. The indexes for raw milk, carbon steel
scrap, natural gas, fresh and dry vegetables, and unprocessed finfish also moved higher. In contrast,
prices for slaughter poultry fell 7.6 percent. The indexes for hay, hayseeds, and oilseeds and
corrugated wastepaper also moved lower.

Services for intermediate demand: The index for services for intermediate demand climbed 0.4
percent in March, the largest increase since advancing 0.6 percent in October 2018. Nearly two-thirds
of the March rise can be traced to prices for services less trade, transportation, and warehousing for
intermediate demand, which moved up 0.3 percent. Margins for trade services for intermediate
demand increased 0.8 percent. Conversely, the index for transportation and warehousing services for
intermediate demand declined 0.2 percent. For the 12 months ended in March, prices for services for
intermediate demand advanced 2.6 percent.

Product detail: About 30 percent of the rise in prices for services for intermediate demand is
attributable to the index for staffing services, which climbed 1.8 percent. The indexes for deposit
services (partial); portfolio management; machinery and equipment parts and supplies wholesaling;
cable network advertising time sales; and courier, messenger, and U.S. postal services also moved
higher. In contrast, prices for long-distance motor carrying fell 1.2 percent. The indexes for loan
services (partial) and metals, minerals, and ores wholesaling also decreased.

Tables and additional detail here: https://www.bls.gov/news.release/archives/ppi_04112019.htm

Note: The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS) is a family of
indexes that measures the average change over time in prices received (price changes) by
producers for domestically produced goods, services, and construction. PPIs measure
price change from the perspective of the seller. This contrasts with other measures,
such as the Consumer Price Index (CPI). CPIs measure price change from the purchaser’s
perspective.