January 12, 2024
The U.S. Bureau of Labor Statistics revealed that the Producer Price Index (PPI) for final demand experienced a 0.1 percent decline in December 2023, continuing a downward trend observed in November and October. This decrease was primarily driven by a 0.4-percent drop in prices for final demand goods, while the index for final demand services remained unchanged. On an annual basis, the PPI for final demand showed a 1.0 percent increase in 2023, marking a significant deceleration compared to the 6.4 percent rise recorded in 2022.
In December, the index for final demand excluding foods, energy, and trade services increased by 0.2 percent, continuing a modest upward trend observed in the preceding two months. Throughout 2023, prices for final demand excluding these components rose by 2.5 percent, representing a notable deceleration from the 4.7 percent increase recorded in 2022.
Final demand goods
In December, the index for final demand goods experienced a 0.4 percent decline, marking the third consecutive month of decrease. The primary contributor to this decline was a 1.2-percent drop in prices for final demand energy, accounting for nearly 60 percent of the overall decrease. Additionally, the index for final demand foods decreased by 0.9 percent, while prices for final demand goods excluding foods and energy remained unchanged during the same period.
50 percent of the decline in the index for final demand goods can be attributed to a 12.4 percent decrease in prices for diesel fuel. Additionally, several other items contributed to the overall decrease, including lower indexes for jet fuel, fresh-use eggs, non-carbonated soft drinks, passenger cars, and hay, hayseeds, and oilseeds. On the contrary, prices for gasoline showed an increase of 2.1 percent. Furthermore, the indexes for carbonated soft drinks and nonferrous scrap also saw an uptick during the same period.
Final demand services
The index for final demand services showed no change in December, mirroring the stability observed in both November and October. Within this category, prices for final demand services excluding trade, transportation, and warehousing increased by 0.4 percent in December. In contrast, the indexes for final demand trade services and final demand transportation and warehousing services experienced declines of 0.8 percent and 0.4 percent, respectively, during the same period.
In December, within the final demand services index, there was a notable 3.3 percent increase in prices for securities brokerage, dealing, and investment advice. Additionally, several other service categories experienced price hikes, including consumer loans (partial), application software publishing, airline passenger services, and fuels and lubricants retailing. On the other hand, margins for machinery and vehicle wholesaling decreased by 5.5 percent. Furthermore, declines were observed in the indexes for guestroom rental, long-distance motor carrying, automobiles and parts retailing, and apparel wholesaling during the same period.
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