Report: Producer Price Index rose nearly 2 percent in August

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

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

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

Final Demand

Final demand services: The index for final demand services advanced 0.3 percent in August after edging down 0.1 percent in July. Almost 80 percent of the broad-based increase can be traced to prices for final demand services less trade, transportation, and warehousing, which climbed 0.5 percent. Margins for final demand trade services rose 0.2 percent, and prices for final demand transportation and warehousing services advanced 0.3 percent. (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 percent. 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 percent. The indexes for health, beauty, and optical goods retailing and for support activities for oil and gas operations also decreased. (See table 4.)

Final demand goods: The index for final demand goods moved down 0.5 percent in August, the largest decrease since falling 0.6 percent in January. Over 80 percent of the August decline can be attributed to prices for final demand energy, which dropped 2.5 percent. The index for final demand foods moved down 0.6 percent, 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 percent. 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 percent. The indexes for iron and steel scrap and for residential electric power also increased.