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Producer Prices Up 0.2% in December; 6.9% Annual Increase in Core PPI

Summary:
RJS Reports: Producer Prices Rose 0.2% in December; Record 6.9% Annual Increase in Core PPI; Record 7.9% YoY Increase for Final Demand Services The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.2% in December, as average prices for finished wholesale goods fell 0.4%, while margins of final services providers were 0.5% higher . . . that increase followed a revised 1.0% increase in November, when prices for finished wholesale goods rose 1.1% while margins of final services providers were 0.9% higher, a revised 0.6% increase in October, when prices for finished wholesale goods rose 1.3% while margins of final services providers were 0.2% higher, a revised 0.4% increase in September, when prices for finished wholesale goods

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RJS Reports: Producer Prices Rose 0.2% in December; Record 6.9% Annual Increase in Core PPI; Record 7.9% YoY Increase for Final Demand Services

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.2% in December, as average prices for finished wholesale goods fell 0.4%, while margins of final services providers were 0.5% higher . . . that increase followed a revised 1.0% increase in November, when prices for finished wholesale goods rose 1.1% while margins of final services providers were 0.9% higher, a revised 0.6% increase in October, when prices for finished wholesale goods rose 1.3% while margins of final services providers were 0.2% higher, a revised 0.4% increase in September, when prices for finished wholesale goods rose 1.1% while margins of final services providers were 0.1% higher, and a revised 0.9% increase in August, when prices for finished wholesale goods rose 0.9% and margins of final services providers also rose 0.9% . . . on an unadjusted basis, producer prices are 9.7% higher than a year ago, down from the upwardly revised 9.8% year over year increase now shown for November’s producer prices, while the core producer price index, which excludes food, energy and trade services, rose by 0.4% for the month, and is now a record 6.9% higher than in a year ago, statistically matching but fractionally greater than the 6.9% year over year core PPI increase that was indicated in November… 

Below we are including a graph showing the year over year change in the Core Final Demand price index, monthly over the period that the metric has been computed: 

As we noted, the price index for final demand for goods, previously called ‘finished goods’, was 0.4% lower in December, after being revised to 1.1% higher in November, 1.3% higher in October. 1.1% higher in September, 0.9% higher in August, 0.7% higher in July, 1.2% higher in June, 1.5% higher in May, 0.7% higher in April, 1.5% higher in March, 1.6% higher in February, 1.6% higher in January, 0.9% higher in December, and 0.4% higher in November of last year, and hence is now up by 13.37% from a year ago, albeit down from November’s 14.85% record annual increase . . . the finished goods price index fell 0.4% in December as the price index for wholesale energy goods was 3.3% lower, after it had risen by a revised 2.0% in November, by 5.5% in October and by 2.1% in September, and as the price index for wholesale foods fell 0.6%, after rising by a revised 1.3% in November but falling by a revised 0.3% in October, while the index for final demand for core wholesale goods (excluding food and energy) was 0.5% higher, after it had risen by a revised 0.8% in November, 0.6% in October and 0.5% in September . . . wholesale energy prices averaged 3.3% lower on a 6.1% decrease in wholesale prices for gasoline, a 5.9% decrease in wholesale prices for diesel fuel, and a 19.4% decrease in wholesale prices for liquefied petroleum gas, while the wholesale food price index fell 0.6% on 5.5% decrease in the wholesale price index for fresh fruits and melons, a 14.7% decrease in the wholesale price index for fresh and dry vegetables, and an 8.6% decrease in the wholesale price index for beef and veal, even as the wholesale price index for eggs for fresh use rose 46.9% . . . among core wholesale goods, the wholesale price index for household appliances rose 2.1%, the wholesale price index for agricultural machinery and equipment rose 2.5%, the wholesale price index for transformers and power regulators rose 2.5%, the wholesale price index for printing trades machinery and equipment rose 3.0%, the wholesale price index for mobile homes rose 4.5%, the wholesale price index for truck trailers rose 4.2%, and the wholesale price index for consumer, institutional, and commercial products not elsewhere classified rose 3.3%…. 

At the same time, the index for final demand for services rose 0.5% in December, after rising a revised 0.9% in November, a revised 0.2% in October, a revised 0.1% in September, a revised 0.9% in August, and by 1.0% in July, and is now up by a record 7.9% from a year ago, up from the 7.1% year over year increase that was indicated in October . . . the index for final demand for trade services rose 0.8% and the index for final demand for transportation and warehousing services rose 1.7%, while the core index for final demand for services less trade, transportation, and warehousing services was 0.2% higher . . . among trade services, seasonally adjusted margins for fuels and lubricants retailers rose 13.0%, margins for furnishings wholesalers rose 9.6%, margins for TV, video, and photographic equipment and supplies retailers rose 2.4%, margins for food and alcohol retailers rose 1.7%, and margins for furniture retailers rose 1.7%, while margins for automobile retailers fell 3.6%…among transportation and warehousing services, average margins for airline passenger services rose 5.3%, margins for air transportation of freight rose 2.3%, and margins for truck transportation of freight rose 0.4% . . . among the components of the core final demand for services index, the price index for price index for traveler accommodation services rose 2.3%, the price index for consumer loans rose 1.4%, and the price index for sales and subscriptions of periodicals and newspapers rose 0.9%, while the price index for deposit services fell 4.3%… 

Here is a graph showing the year over year change in the Final Demand for Services price index, monthly over the period that this metric has been computed: 

This report also showed the price index for intermediate processed goods fell 0.3% in December, after rising a revised 1.6% in November, a revised 2.4% in October, a revised 1.1% in September, a revised 0.9% in August, and rising by 1.6% in July, 1.8% in June, by 2.9% in May, 1.9% in April, 3.5% in March, 2.9% in February, and 1.8% in January, and 1.4% in December of 2020 . . . the price index for intermediate energy goods fell 4.1% in December, as producer prices for liquefied petroleum gas fell 19.4%, producer prices for natural gas sold to electric utilities fell 10.4%, producer prices for industrial natural gas fell 3.5%, refinery prices for gasoline fell 6.1%, refinery prices for jet fuel fell 11.1%, and refinery prices for diesel fuel fell 5.9% . . . at the same time, the price index for intermediate processed foods and feeds fell 0.5%, as the producer price index for meats fell 5.1%, the producer price index for prepared animal feeds fell 0.7%, and the producer price index for fats and oils fell 2.4% . . . on the other hand, the core price index for intermediate processed goods less food and energy goods rose 0.7%, as the producer price index for softwood lumber rose 24.4%, the producer price index for plywood rose 1.7%, the producer price index for parts for manufacturing from plastics rose 2.7%, the producer price index for heating equipment rose 4.9%, the producer price index for metal containers rose 2.8%, the producer price index for wiring devices rose 2.1%, the producer price index for primary nonferrous metals rose 2.1%, the producer price index for plumbing fixtures and brass fittings rose 2.1%, the producer price index for biological products, including diagnostics rose 4.3%, the producer price index for phosphates rose 3.8%, and the producer price index for nitrogenates rose 12.8%, while the producer price index for aluminum mill shapes fell 4.9% and the producer price index for asphalt felts and coatings fell 4.2% . . . average prices for intermediate processed goods are now 24.4% higher than in November a year ago, down from their 26.5% year over year increase in November, which had been a 46 year high….. 

Meanwhile, the price index for intermediate unprocessed goods fell 5.6% in December, after rising by a revised 2.1% in November. a revised 5.8% in October, a revised 2.7% in September, a revised 1.9% in August, and rising by 2.9% in July, by 1.8% in June, by 7.2% in May, and by 2.0% in April, after falling by 4.2% in March, but after rising by 11.9% in February, and by 5.3% in January, and by 2.1% last December…that was as the December price index for crude energy goods fell 13.1% as crude oil prices fell 16.4%, unprocessed natural gas prices fell 12.0%, and coal prices fell 0.9%, while the price index for unprocessed foodstuffs and feedstuffs was 2.8% higher on a 21.1% increase in producer prices for slaughter chickens, a 3.3% increase in producer prices for slaughter turkeys, a 2.4% increase in producer prices for slaughter cattle, a 4.5% increase in producer prices for corn, and a 3.1% increase in producer prices for wheat . . . at the same time, the index for core raw materials other than food and energy materials was 2.0% lower, as the price index for raw cotton fell 9.3%, as the price index for hdes and skins fell 9.2%, the price index for recyclable paper fell 7.2%, the price index for nonferrous metal ores fell 4.3%. and the price index for iron and steel scrap fell 2.7% . . . this raw materials index still 38.0% higher than a year ago, albeit down from the 49.3% year over year increase in November and the record 59.2% annual increase in April, and the fourteenth consecutive year over year increase for this index after the annual change on this index had been negative from the beginning of 2019 through October of 2020… 

Lastly, the price index for services for intermediate demand rose 0.6% in November, after rising by a revised 0.3% in November, being unchanged in October, after rising by a revised 0.4% in September, a revised 0.4% in August, and rising by 0.6% in July, 1.2% in June, by 0.6% in May, by 1.3% in April, by 0.6% in March, by 0.3% in February, by 1.1% in January, and by 0.7% in December 2020 . . . the price index for intermediate trade services was 1.4% higher, as margins for intermediate machinery and equipment parts and supplies wholesalers rose 2.6%, margins for intermediate chemicals and allied products wholesalers rose 2.1%, and margins for intermediate food wholesalers rose 1.2% . . . meanwhile, the index for transportation and warehousing services for intermediate demand was 1.6% higher, as the intermediate price index for transportation of passengers rose 5.2%, the intermediate price index for air transportation of freight rose 1.6%, the intermediate price index for water transportation of freight rose 3.5%, the intermediate price index for arrangement of freight and cargo rose 6.4%, and the intermediate price index for warehousing, storage, and related services rose 3.8% . . . at the same time, the core price index for intermediate services other than trade, transportation, and warehousing services rose 0.4%, as the intermediate price index for business loans rose 3.4%, the intermediate price index for television advertising time sales rose 4.6%, the intermediate price index for janitorial services rose 2.5%, and the intermediate price index for traveler accommodation services rose 2.3% . . . over the 12 months ended in December, the year over year price index for services for intermediate demand is now 8.0% higher than it was a year ago, the fourteenth consecutive positive annual increase in this index change since it briefly turned negative year over year from April to August of last year, but is still down from the record 9.5% year over year increase now shown for July….

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