July 12, 2024
In June, the Producer Price Index (PPI) for final demand increased by 0.2 percent on a seasonally adjusted basis, according to the U.S. Bureau of Labor Statistics. This follows an unchanged rate in May and a 0.5 percent increase in April. Over the 12 months ending in June, the unadjusted final demand index rose by 2.6 percent, the largest advance since the 2.7 percent uptick for the 12 months ended March 2023.
In June, the index for final demand saw an increase primarily driven by a 0.6 percent rise in prices for final demand services. However, this increase was offset by a 0.5 percent decrease in the index for final demand goods, indicating mixed trends within the overall demand sector.
When excluding foods, energy, and trade services, prices remained unchanged in June after a 0.2 percent increase in May. Over the past year, the index for final demand less these categories increased by 3.1 percent, highlighting ongoing inflationary pressures in certain sectors while showcasing stability in others.
Final demand goods
In June, prices for final demand goods decreased by 0.5 percent, following a 0.8 percent decline in May. The majority of this decrease is due to a significant 2.6 percent drop in the index for final demand energy. Additionally, prices for final demand foods fell by 0.3 percent, while the index for final demand goods excluding foods and energy remained unchanged.
Over 60 percent of the June decrease in the index for final demand goods can be attributed to a substantial 5.8 percent decline in gasoline prices. Other notable declines were seen in the indexes for processed poultry, residential electric power, diesel fuel, jet fuel, and fresh and dry vegetables. In contrast, prices for chicken eggs surged by 55.4 percent, and there were increases in the indexes for residential natural gas and aluminium base scrap.
Final demand services
In June, prices for final demand services rose by 0.6 percent, following a 0.3 percent increase in May. This significant rise is largely attributed to a 1.9 percent jump in margins for final demand trade services, which measure changes in margins received by wholesalers and retailers. Additionally, the index for final demand services excluding trade, transportation, and warehousing experienced a modest increase of 0.1 percent, while prices for transportation and warehousing services fell by 0.4 percent.
A notable portion of the June increase in prices for final demand services, over one-quarter, can be attributed to a 3.7 percent rise in margins for machinery and vehicle wholesaling. Other sectors contributing to the rise included automobiles and automobile parts retailing, partial deposit services, fuels and lubricants retailing, computer hardware, software, and supplies retailing, and professional and commercial equipment wholesaling. Conversely, prices for truck transportation of freight decreased by 1.2 percent, alongside declines in indexes for partial residential real estate loans and machinery and equipment parts and supplies wholesaling.
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