September 15, 2023
In August, the Producer Price Index (PPI) for final demand in the United States increased by 0.7 percent, following a 0.4 percent rise in July. This August increase is the largest observed since a 0.9 percent rise in June 2022. On an unadjusted basis, the index for final demand increased by 1.6 percent over the 12 months ending in August.
The rise in final demand prices in August was primarily driven by a 2.0-percent increase in the index for final demand goods, which accounted for 80 percent of the overall increase. Prices for final demand services also advanced, but at a lower rate of 0.2 percent. Excluding the impact of food, energy, and trade services, the index for final demand increased by 0.3 percent in August, the same as in July. Over the 12 months ending in August, prices for final demand, excluding these factors, rose by 3.0 percent. This represents the largest increase in this category since a 3.4 percent rise over the 12 months ending in April.
Final demand goods
In August, the Producer Price Index (PPI) for final demand goods experienced a significant increase of 2.0 percent, the largest surge since June 2022 when it rose by 2.1 percent. This jump in August was primarily driven by a substantial 10.5 percent increase in prices for final demand energy. However, prices for final demand goods, excluding food and energy, only saw a marginal 0.1 percent increase. In contrast, prices for final demand foods declined by 0.5 percent during the same period.
The notable drivers of the August rise in the index for final demand goods were prices for gasoline, which surged by a substantial 20.0 percent. Other products that contributed to the increase included diesel fuel, jet fuel, home heating oil, beverages and beverage materials, and iron and steel scrap. Conversely, prices for fresh and dry vegetables experienced a notable decrease of 11.5 percent. Additionally, the indexes for residential electric power and industrial chemicals also decreased during the same period.
Final demand services:
The index for final demand services rose 0.2 percent in August after increasing 0.5 percent in July. Leading the advance in August, prices for final demand services less trade, transportation, and warehousing moved up 0.3 percent. The index for final demand transportation and warehousing services jumped 1.4 percent. In contrast, margins for final demand trade services declined 0.3 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)
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