EconoIndicators

Producer Price Index At a Glance

• Finished Goods Index: Down 0.4%
• Finished Goods Core: Up 0.4%
• Finished Goods Annual Change: Up 8.7%
• Finished Goods Energy: Down 2.9%
• Finished Goods Food: Up 0.2%
• Intermediate Goods Index: Down 1.2%
• Crude Goods Index: Down 7.9%

Technorati Tags: PPI, inflation, Producer, Price, Index

Producer Price Indexes – September 2008

The Producer Price Index for Finished Goods decreased 0.4 percent in September,
seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported
today. This decline followed a 0.9-percent drop in August and a 1.2-percent increase in July. At
the earlier stages of processing, prices received by producers of intermediate goods fell 1.2
percent after decreasing 1.0 percent a month earlier, and the decline in the crude goods index
slowed to 7.9 percent in September from 11.9 percent in the preceding month. (See table A.)
The slower rate of decline in finished goods prices was led by the index for energy goods,
which decreased 2.9 percent after falling 4.6 percent in August. Price advances for finished
goods less foods and energy accelerated to 0.4 percent from 0.2 percent a month earlier.
Conversely, the rise in the index for finished consumer foods slowed to 0.2 percent in September
from 0.3 percent in the prior month.

During the third quarter of 2008, the finished goods index fell at a 0.4-percent seasonally
adjusted annual rate (SAAR), after climbing at a 14.6-percent SAAR during the second quarter.
Much of this downturn can be attributed to the index for finished energy goods, which decreased
at a 16.7-percent SAAR for the 3 months ended in September after jumping at a 51.6-percent
SAAR for the 3 months ended in June. Prices for finished consumer foods moved up at a 3.1-
percent SAAR during the third quarter after rising at a 9.2-percent SAAR during the second
quarter. Conversely, the index for finished goods less foods and energy advanced at a 5.4-
percent SAAR for the 3 months ended in September after increasing at a 4.4-percent SAAR for
the 3 months ended in June. At the earlier stages of processing, the intermediate goods index
moved up at a 2.1-percent SAAR during the third quarter after surging at a 25.7-percent SAAR
in the second quarter, and prices for crude goods decreased at a 48.9-percent SAAR for the 3
months ended in September after jumping at a 79.1-percent SAAR for the 3 months ended in
June. (See summary table.)

Before seasonal adjustment, the Producer Price Index for Finished Goods fell 0.1 percent
in September to 182.0 (1982 = 100). From September 2007 to September 2008, finished goods
prices climbed 8.7 percent. Over the same period, the index for finished energy goods increased
22.4 percent, prices for finished consumer foods moved up 8.1-percent, and the index for
finished goods less foods and energy advanced 4.0 percent. For the 12 months ended in
September, prices received by manufacturers of intermediate goods rose 15.4 percent, and the
crude goods index increased 26.0 percent.
Finished goods

The decline in the finished energy goods index slowed to 2.9 percent from 4.6 percent in
August. The index for gasoline fell 0.5 percent in September after moving down 3.5 percent a
month earlier. Prices for liquefied petroleum gas and diesel fuel also decreased less than in the
preceding month. The index for kerosene turned up in September after falling in the prior
month. By contrast, partially offsetting the slowing declines in finished energy goods prices, the
index for residential natural gas dropped 8.2 percent after moving down 5.0 percent in August.
Prices for asphalt and finished lubricants rose less than in the previous month. The index for
residential electric power turned down in September after advancing a month earlier. (See table
2.)

The increase in the index for finished goods less foods and energy accelerated to 0.4
percent from 0.2 percent in August. The index for light motor trucks turned up 1.0 percent after
falling 1.9 percent in the previous month. Prices for passenger cars also rose after declining a
month earlier. The index for pharmaceutical preparations advanced more in September than in
the preceding month. By contrast, the index for pet food turned down 0.2 percent after
increasing 3.3 percent in August. Prices for periodical circulation; motor homes built on
purchased chassis; women’s, girls’, and infants’ apparel; and office and store machines and
equipment also fell after rising in the prior month.

The index for finished consumer foods climbed 0.2 percent after rising 0.3 percent in
August. In September, higher prices for fresh and dry vegetables, snack chips, sausage and deli
meats, and eggs for fresh use outweighed lower prices for beef and veal, natural cheese (except
cottage cheese), fats and oils, and strawberries.
Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components fell 1.2
percent in September following a 1.0-percent decrease in the previous month. Prices for
materials for both nondurable and durable manufacturing turned down in September. The index
for materials and components for construction rose less than it had in August, while prices for
intermediate foods and feeds declined more in September than they had a month earlier.
Conversely, partially counteracting the faster rate of decrease in prices for intermediate goods,
the index for intermediate energy foods fell less in September than in August. Excluding foods
and energy, prices for intermediate goods moved down 0.3 percent in September after climbing
1.7 percent in the preceding month. (See table B.)

The index for materials for nondurable manufacturing dropped 2.9 percent in September
following a 5.2-percent jump in the previous month. Leading this downturn, prices for basic
organic chemicals fell 4.8 percent after increasing 6.3 percent in August. The indexes for plastic
resins and materials, woodpulp, and meats also declined in September following increases in the
prior month. Prices for agricultural chemicals and chemical products, non-corrugated
paperboard, and writing and printing papers rose less than they had in August. Conversely, the
index for medicinal and botanical chemicals advanced 10.9 percent in September after moving
up 1.8 percent a month earlier. Prices for potassium and sodium compounds and for synthetic
fibers also increased more than they had in August. (See table 2.) The index for materials for
nondurable manufacturing climbed at a 34.7-percent SAAR for the 3 months ended in September
after rising at a 30.8-percent SAAR for the 3 months ended in June.

The index for materials for durable manufacturing decreased 3.2 percent in September
following a 0.4-percent advance in the previous month. Leading this downturn, prices for steel
mill products dropped 3.6 percent after rising 2.2 percent in August. The indexes for aluminum
mill shapes, plastic resins and materials, secondary aluminum, and basic organic chemicals also
fell in September following increases a month earlier. Prices for primary nonferrous metals and
for copper and brass mill shapes declined more than they had in August. The index for prepared
paint rose less than in the prior month. Conversely, the synthetic fibers index climbed 3.7
percent in September after advancing 1.1 percent in the preceding month. Prices for adhesives
and sealants also rose more than in August. Prices for materials for durable manufacturing
declined at a 5.4-percent SAAR during the third quarter of 2008 after surging at a 35.8-percent
SAAR during the second quarter.

The index for materials and components for construction rose 0.7 percent in September
following a 1.5-percent gain in the prior month. Prices for paving mixtures and blocks moved up
3.1 percent after advancing 9.6 percent in August. The index for asphalt felts and coatings also
increased less in September than it had a month earlier. Prices for steel mill products; nonferrous
wire and cable; and metal doors, sash, and trim turned down after rising in August. The index
for fabricated structural metal was unchanged in September following an increase in the
preceding month. By contrast, prices for ready mixed concrete advanced 1.4 percent after
moving down 0.3 percent in August. The index for custom roll-formed metal products also
turned up in September. Prices for architectural and ornamental metalwork rose more than they
had in August. The index for materials and components for construction climbed at a 16.9-
percent SAAR for the 3 months ended in September after moving up at a 19.5-percent SAAR for
the 3 months ended in June.

The index for intermediate foods and feeds fell 0.9 percent in September following a 0.2-
percent decline in the previous month. Meat prices decreased 0.6 percent after increasing 4.4
percent in August. The index for flour and flour-base mixes and doughs also turned down in
September. Prices for formula feeds, natural cheese (except cottage cheese), and shortening and
cooking oils fell more than they had in August. By contrast, the processed eggs index jumped
12.8 percent in September following a 4.7-percent decline a month earlier. Prices for snack
chips and for corn, cottonseed, and soybean cake and meal advanced more than they had in
August. The index for packaged fluid milk and related products fell less than in the preceding
month. The index for intermediate foods and feeds moved up at a 12.1-percent SAAR during the
third quarter after rising at a 14.0-percent SAAR during the second quarter.

The index for intermediate energy goods fell 3.8 percent in September following an 8.2-
percent decrease in the prior month. Jet fuel prices moved down 3.2 percent after dropping 24.9
percent in August. The indexes for diesel fuel, gasoline, natural gas to electric utilities, residual
fuels, liquefied petroleum gas, and commercial natural gas also declined less in September than
they had a month earlier. By contrast, prices for industrial electric power fell 1.4 percent
following a 0.7-percent increase in August. The asphalt index rose less in September than it had
in the preceding month, while prices for commercial electric power were unchanged after
advancing in August. The index for intermediate energy goods decreased at a 28.2-percent
SAAR for the 3 months ended in September after jumping at a 55.4-percent SAAR for the 3
months ended in June.

Crude goods

The Producer Price Index for Crude Materials for Further Processing declined 7.9 percent
in September following an 11.9-percent drop in the prior month. Prices for crude energy
materials and for crude foodstuffs and feedstuffs fell less than they had in the previous month.
By contrast, slightly counteracting the slower rate of decline in the crude goods index, prices for
crude nonfood materials less energy decreased more than in August. (See table B.)

The index for crude energy materials fell 11.7 percent in September subsequent to a 19.4-
percent decrease in the preceding month. Crude petroleum prices moved down 9.0 percent
following a 17.6-percent drop in the previous month. The natural gas index declined 16.5
percent after tumbling 23.9 percent in August. By contrast, prices for coal rose 0.7 percent
compared with a 2.7-percent increase a month earlier. (See table 2.) During the third quarter of
2008, the crude energy materials index decreased at a 66.5-percent SAAR after surging at a
152.2-percent SAAR in the second quarter.

Prices for crude foodstuffs and feedstuffs moved down 1.1 percent in September
compared with a 5.2-percent decline in the preceding month. The corn index fell 1.9 percent
after dropping 14.6 percent in August. The indexes for soybeans and for slaughter broilers and
fryers also fell less than they had a month earlier. Prices for fresh and dry vegetables turned up
in September, and the index for ungraded chicken eggs rose more than in August. By contrast,
prices for slaughter hogs declined 10.8 percent subsequent to a 20.1-percent gain in August. The
indexes for slaughter steers and heifers, wheat, slaughter cows and bulls, and alfalfa hay also
turned down in September. The crude foodstuffs and feedstuffs index fell at a 22.5-percent
SAAR during the third quarter of 2008 after rising at a 15.3-percent SAAR in the prior quarter.

The index for crude nonfood materials less energy declined 9.4 percent following a 1.9-
percent decrease in August. Carbon steel scrap prices dropped 22.5 percent in September after
falling 3.4 percent in the previous month. The index for aluminum base scrap also fell more than
in August. The index for copper ores turned down in September, and prices for phosphates
increased less than in the preceding month. By contrast, prices for plant and animal fibers
increased 8.7 percent compared with a 1.5-percent decline in August. The indexes for
corrugated wastepaper and for stainless and alloy steel scrap also turned up in September. Prices
for soybeans and gold ores fell less than they had in August. For the 3 months ended September
2008, the index for crude nonfood materials less energy declined at a 28.4-percent SAAR after
increasing at a 62.2-percent SAAR in the 3 months ended in June.

Net output price indexes

Mining, Utilities, and Manufacturing Industries. The Producer Price Index for the Net Output
of Total Mining, Utilities, and Manufacturing Industries moved down 0.5 percent compared with
a 1.4-percent decrease in August. (Net output price indexes are not seasonally adjusted.) The
industry index for petroleum refineries declined 0.9 percent after falling 11.4 percent a month
earlier. Similarly, prices received by the industries for crude petroleum and natural gas
extraction and for natural gas distribution also decreased less than they had in the prior month.
The industry index for automotive, light truck, and utility vehicle manufacturing turned up in
September, and prices received by medicinal and botanical manufacturers rose more than in
August. By contrast, partially offsetting the slower rate of decline in the index for Total Mining,
Utilities, and Manufacturing Industries, the index for the electric power generation industry fell
10.0 percent in September following an 8.1-percent gain in the preceding month. Prices received
by the industries for livestock slaughtering and petrochemicals manufacturing also declined after
rising a month earlier. The phosphatic fertilizer manufacturing industry index increased less than
it had in August. For the 3 months ended September 2008, the total mining, utilities, and
manufacturing industries index advanced at a 1.0-percent annual rate after rising at a 23.2-
percent annual rate for the 3 months ended in June. In September, the index for total mining,
utilities, and manufacturing industries was 116.6 (December 2006 = 100), 11.7 percent above its
year-ago level.

Trade Industries. The Producer Price Index for the Net Output of Total Trade Industries
declined 1.2 percent in September subsequent to a 2.1-percent rise in August. (Trade indexes
measure changes in margins received by wholesalers and retailers.) Leading this downturn, the
margin index for merchant wholesalers of nondurable goods fell 5.7 percent after climbing 7.9
percent in the prior month. Margins received by merchant wholesalers of durable goods and fuel
dealers also turned down in September. The margin indexes for gasoline stations with
convenience stores and recreation vehicle dealers increased less than they had a month earlier.
By contrast, the margin index for shoe stores advanced 7.5 percent following a 7.2-percent
decrease in August. Margins received by office supplies and stationery stores and by family
clothing stores also turned up in September. The margin index for pharmacies and drug stores
was unchanged after declining in August and margins received by new car dealers fell less than
they had a month earlier. During the third quarter of 2008, the total trade industries index
increased at an 8.3-percent annual rate subsequent to rising at a 14.8-percent annual rate in the
second quarter. In September, the index for total trade industries was 111.1 (December 2006 =
100), 7.0 percent above its year-ago level.

Transportation and Warehousing Industries. The Producer Price Index for Total
Transportation and Warehousing Industries moved down 0.9 percent in September after edging
up 0.2 percent in August. The index for the scheduled air transportation industry group declined
2.2 percent compared with a 0.9-percent advance in the previous month. Prices received by the
long distance general freight trucking industry group decreased more than in August. The
industry indexes for couriers, deep sea freight transportation, and line-haul railroads increased
less than they had a month earlier. Prices received by the industry for local trucking of
specialized new freight were unchanged after advancing in August. By contrast, the industry
index for Coastal and Great Lakes freight transportation rose 1.2 percent in September after
falling 2.3 percent in the preceding month. Prices received by inland water freight transporters
increased more than in August and the industry index for long distance specialized new freight
trucking declined less in September than it had in the prior month. During the third quarter of
2008, the transportation and warehousing industries index was unchanged after rising at a 20.3-
percent annual rate in the second quarter. In September, the index for total transportation and
warehousing industries was 115.0 (December 2006 = 100), 10.0 percent above it year-ago level.

Traditional Service Industries. The Producer Price Index for Total Traditional Service
Industries edged down 0.2 percent after rising 0.7 percent in August. Prices received by the
accommodation industry group moved down 5.1 percent subsequent to a 0.3-percent decrease a
month earlier. The indexes for the depository credit intermediation industry group and for the
investment banking and securities dealing industry increased less than they had in the prior
month. Prices received by software publishers and by cellular and wireless carriers turned down
in September. The industry index for direct life insurance carriers was unchanged after rising in
August. By contrast, the index for the general medical and surgical hospitals industry advanced
0.2 percent after edging down 0.1 percent in the preceding month. Prices received by the
industry for offices of real estate agents and brokers were unchanged in September after falling
in the prior month, and the portfolio management industry index fell less than in August. The
index for total traditional service industries increased at a 1.2-percent annual rate during the third
quarter of 2008 subsequent to rising at a 2.0-percent annual rate during the second quarter. In
September, the index for total traditional service industries was 102.3 (December 2006 = 100),
0.1 percent above its year-ago level.

Producer Price Index [PPI] – September 2008 [PDF]

Source: Department of Labor, Bureau of Labor Statistics