The Producer Price Index for Finished Goods increased 0.4 percent in August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported on September 16. This rise followed a 0.2-percent advance in July and a 0.5-percent decline in June. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 0.3 percent in August, and the crude goods index climbed 2.3 percent. On an unadjusted basis, prices for finished goods increased 3.1 percent for the 12 months ended August 2010, their tenth straight year-over-year rise.
Stage-of-Processing Analysis
Finished goods
The August advance in the finished goods index can be traced primarily to prices for finished energy goods, which rose 2.2 percent. The index for finished goods less foods and energy edged up 0.1 percent. By contrast, prices for finished consumer foods fell 0.3 percent in August.
Finished energy: The index for finished energy goods climbed 2.2 percent in August after decreasing in each of the previous four months. Leading this rise, the gasoline index increased 7.5 percent. Higher prices for liquefied petroleum gas and home heating oil also were factors in the finished energy goods advance.
Finished core: The index for finished goods less foods and energy inched up 0.1 percent in August, its tenth straight rise. A 0.6-percent increase in prices for pharmaceutical preparations was a major factor in the August advance. Higher prices for light motor trucks also contributed to the rise in the finished core index.
Finished foods: The index for finished consumer foods fell 0.3 percent in August, its fourth decrease in the last five months. The August decline can be traced to lower prices for fresh vegetables, excluding potatoes, which moved down 11.2 percent.
Intermediate goods
The Producer Price Index for Intermediate Materials, Supplies and Components increased 0.3 percent in August following decreases in July and June. Accounting for about 85 percent of this broad-based advance, prices for intermediate energy goods rose 1.3 percent. The indexes for both intermediate materials less foods and energy and for intermediate foods and feeds also contributed to this increase, moving up 0.1 percent and 0.9 percent, respectively. On a 12-month basis, prices for intermediate goods climbed 5.0 percent in August, continuing their deceleration from an 8.7-percent peak in April 2010.
Intermediate energy: The index for intermediate energy goods moved up 1.3 percent in August following two consecutive monthly declines. A major factor in this advance was a 6.4-percent rise in diesel fuel prices. The indexes for gasoline and electric power also contributed significantly to higher intermediate energy goods prices.
Intermediate core: The index for intermediate goods less foods and energy edged up 0.1 percent in August after declining 0.4 percent in each of the prior two months. Leading this increase, prices for primary nonferrous metals climbed 8.0 percent. Higher prices for non-ferrous mill shapes also were a factor in the intermediate core advance.
Intermediate foods: The index for intermediate foods and feeds rose 0.9 percent in August, its largest increase since a 1.8-percent gain in December 2009. The August advance was led by formula feed prices, which moved up 3.3 percent.
Crude goods
The Producer Price Index for Crude Materials for Further Processing moved up 2.3 percent in August. For the three months ending in August, crude materials prices rose 2.5 percent after falling 1.7 percent from February to May. In August, more than half of the monthly increase can be attributed to the index for crude foodstuffs and feedstuffs, which moved up 3.5 percent. Also contributing to this broad-based advance, prices for crude non-food materials less energy and crude energy materials rose 4.1 percent and 0.5 percent, respectively.
Crude foods: The index for crude foodstuffs and feedstuffs increased 3.5 percent in August. From May to August, prices for crude foods moved up 1.2 percent subsequent to a 3.8-percent advance for the three months ending in May. The monthly rise in August was led by prices for hay, hayseeds and oilseeds, which climbed 12.0 percent. Advances in the indexes for corn and slaughter livestock also contributed to the increase in crude foods prices.
Crude core: The index for crude nonfood materials less energy rose 4.1 percent in August. For the three-month period ending in August, crude core prices decreased 2.4 percent. This decline followed a 7.6-percent increase from February to May. About 30 percent of the August monthly advance can be traced to a 9.5-percent rise in the index for non-ferrous scrap. Higher prices for iron and steel scrap also were a factor in the advance in the crude core index.
Crude energy: The index for crude energy materials moved up 0.5 percent in August. From May to August, crude energy prices climbed 6.7 percent following an 11.0-percent drop in the previous three-month period. Leading the August monthly rise was a 1.8-percent advance in the index for crude petroleum.
Services Analysis
Trade industries: The Producer Price Index for the Net Output of Total Trade Industries moved up 0.4 percent in August, its second consecutive monthly advance. (Trade indexes measure changes in margins received by wholesalers and retailers.) Leading the August increase, the margin index for wholesale clubs and supercenters jumped 30.1 percent. Higher margins received by wholesale trade industries and gasoline stations with convenience stores also contributed to the rise in the total trade industries index.
Transportation and warehousing industries: The Producer Price Index for the Net Output of Transportation and Warehousing Industries fell 0.2 percent in August, following seven consecutive monthly increases. Over 30 percent of this decline can be attributed to prices received by the scheduled passenger air transportation industry, which moved down 0.4 percent. Lower prices received by the industries for general warehousing and storage and by line-haul railroads also were factors in the decline in the transportation and warehousing industries index.
Traditional service industries: The Producer Price Index for the Net Output of Total Traditional Service Industries moved up 0.3 percent in August, its fifth consecutive monthly increase. About 70 percent of the August advance can be traced to prices received by the depository credit intermediation industry group, which climbed 2.2 percent. Higher prices received by portfolio managers and management consultants also contributed to the rise in the total traditional service industries index.
