Producer Price Index Rose Nearly two Percent in August

The Producer Price Index (PPI) for final demand rose 0.1% in August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved up 0.2% in July and 0.1% in June. On an unadjusted basis, the final demand index rose 1.8% for the 12 months ended in August.

In August, the advance in final demand prices is attributable to a 0.3% increase in the index for final demand services. In contrast, prices for final demand goods fell 0.5%.

The index for final demand, less foods, energy, and trade services, rose 0.4% in August following a 0.1% decline in July. For the 12 months ended in August, prices for final demand less foods, energy, and trade services moved up 1.9%.

Final Demand

Final Demand Services: The index for final demand services advanced 0.3% in August after edging down 0.1% in July. Almost 80% of the broad-based increase can be traced to prices for final demand services less trade, transportation, and warehousing, which climbed 0.5%. Margins for final demand trade services rose 0.2%, and prices for final demand transportation and warehousing services advanced 0.3%. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product Detail: A major factor in the increase in prices for final demand services was the index for guestroom rental, which moved up 6.4%. The indexes for fuels and lubricants retailing; apparel, footwear, and accessories retailing; chemicals and allied products wholesaling; gaming receipts (partial); and insurance also advanced. Conversely, margins for machinery and vehicle wholesaling declined 4.2%. The indexes for health, beauty, and optical goods retailing and for support activities for oil and gas operations also decreased.

Final Demand Goods: The index for final demand goods moved down 0.5% in August, the largest decrease since falling 0.6% in January. Over 80% of the August decline can be attributed to prices for final demand energy, which dropped 2.5%. The index for final demand foods moved down 0.6%, while prices for final demand goods less foods and energy were unchanged.

Product Detail: Almost two-thirds of the August decline in the index for final demand goods can be traced to prices for gasoline, which dropped 6.6%. The indexes for fresh and dry vegetables, diesel fuel, corn, home heating oil, and ethanol also moved lower. In contrast, prices for meats advanced 3.0%. The indexes for iron and steel scrap and for residential electric power also increased.