November 9, 2021
The Producer Price Index for final demand increased 0.6% in October, seasonally adjusted. For reference, final demand prices moved up 0.5% in September and 0.7% in August. Over 60% of the October increase in the index for final demand can be traced to a 1.2% rise in prices for final demand goods. The index for final demand services moved up 0.2% and prices for final demand construction advanced 6.6%. Prices for final demand less foods, energy, and trade services moved up 0.4% in October after increasing 0.1% in September. For the 12 months ended in October, the index for final demand less foods, energy, and trade services rose 6.2%.
Final demand goods:
The index for final demand goods moved up 1.2% in October following a 1.3% increase in September. In October, three-quarters of the advance can be attributed to a 4.8% jump in prices for final demand energy while the index for final demand goods less foods and energy moved up 0.5%. Conversely, prices for final demand foods decreased 0.1%. One-third of the October advance in the index for final demand goods can be traced to prices for gasoline, which rose 6.7%. The indexes for diesel fuel, fresh and dry vegetables, gas fuels, jet fuel, and plastic resins and materials also moved higher. In contrast, prices for beef and veal decreased 10.3%. The indexes for light motor trucks and for residential electric power also fell. (In accordance with usual practice, most new-model-year passenger cars and light motor trucks were introduced into the PPI in October.
Final demand services:
Prices for final demand services moved up 0.2% in October, the tenth consecutive advance. Nearly two-thirds of the increase in October can be attributed to the index for final demand trade services, which rose 0.4%. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services advanced 1.7%. Conversely, the index for final demand services less trade, transportation, and warehousing fell 0.1%. Over 80% of the October increase in prices for final demand services can be traced to margins for automobiles and automobile parts retailing, which rose 8.9%. The indexes for apparel, footwear, and accessories retailing; truck transportation of freight; food and alcohol retailing; hospital outpatient care; and machinery and equipment parts and supplies wholesaling also moved up. In contrast, prices for securities brokerage, dealing, investment advice, and related services fell 6.6%. The indexes for fuels and lubricants retailing and for portfolio management also declined
Intermediate Demand by Commodity Type:
Within intermediate demand in October, prices for processed goods moved up 2.1%, the index for unprocessed goods increased 8.4%, and prices for services rose 0.2%. The index for processed goods for intermediate demand advanced 2.1 % in October, the largest rise since climbing 2.9% in May. About two-thirds of the October increase can be traced to prices for processed energy goods, which moved up 7.3%. The index for processed materials less foods and energy rose 1.1%. Conversely, prices for processed foods and feeds fell 0.9%. For the 12 months ended in October, the index for processed goods for intermediate demand advanced 25.4%, the largest 12-month increase since jumping 26.3% in January 1975. Nearly 30% of the October increase in the index for processed goods for intermediate demand can be attributed to a 14.2% rise in prices for diesel fuel. The indexes for utility natural gas, cold rolled steel sheet and strip, gasoline, jet fuel, and hot rolled steel sheet and strip also moved higher. In contrast, prices for beef and veal fell 10.3 %. The indexes for primary basic organic chemicals and for commercial electric power also decreased. Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand rose 8.4% in October, the seventh consecutive increase. Leading the advance in October, prices for unprocessed energy materials jumped 23.3%. The index for unprocessed nonfood materials less energy moved up 1.1%. Conversely, prices for unprocessed foodstuffs and feedstuffs fell 3.8%. For the 12 months ended in October, the index for unprocessed goods for intermediate demand surged 56.6%.
In October, nearly three-fourths of the rise in prices for unprocessed goods for intermediate demand can be traced to a 33.7% jump in the index for natural gas. Prices for crude petroleum, recyclable paper, raw cotton, coal, and fresh vegetables (except potatoes) also moved higher. In contrast, the index for corn decreased 7.6%. Prices for slaughter hogs and for hides and skins also declined.
Services for intermediate demand:
The index for services for intermediate demand moved up 0.2% in October, the eleventh consecutive advance. Over three-fourths of the October increase can be attributed to a 0.7% rise in margins for trade services for intermediate demand. The index for transportation and warehousing services for intermediate demand climbed 0.8%. Conversely, prices for services less trade, transportation, and warehousing for intermediate demand edged down 0.1%. For the 12 months ended in October, the index for services for intermediate demand advanced 7.4%.
Over half of the October rise in prices for services for intermediate demand can be traced to a 1.7% advance in margins for machinery and equipment parts and supplies wholesaling. The indexes for building materials, paint, and hardware wholesaling; staffing services; business loans (partial); truck transportation of freight; and paper and plastics products wholesaling also increased. In contrast, prices for securities brokerage, dealing, investment advice and related services fell 6.6%. The indexes for fuels and lubricants retailing and for services related to air transportation also declined.
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