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Producer Price Index for finished goods declines 0.1% and finished core increases 0.3%

PRODUCER PRICE INDEXES - DECEMBER 2011


The Producer Price Index for finished goods declined 0.1 percent in December, seasonally 
adjusted, the U.S. Bureau of Labor Statistics reported today. Prices for finished goods moved up 
0.3 percent in November and fell 0.3 percent in October. At the earlier stages of processing, the 
index for intermediate goods decreased 0.5 percent in December, and crude goods prices moved 
down 1.1 percent. On an unadjusted basis, the index for finished goods increased 4.8 percent in 
2011 after rising 3.8 percent in 2010. (See table A.)

Table A. Monthly and 12-month percent changes in selected stage-of-processing price indexes, seasonally adjusted
Month Finished goods Intermediate
goods
Crude
goods
Total Foods Energy Except foods
and energy
Change in
finished goods
from 12 months
ago (unadj.)

2010

 

Dec.

0.9 0.8 2.5 0.2 3.8 1.1 6.9

2011

 

Jan.

1.0 0.4 2.8 0.5 3.6 1.6 3.5

Feb.

1.5 3.5 2.9 0.2 5.4 1.9 3.1

Mar.

0.7 -0.4 2.8 0.3 5.6 1.4 -0.8

Apr.

0.8 0.5 2.2 0.3 6.6 1.4 3.9

May

0.1 -1.2 1.1 0.1 7.1 0.6 -4.3

June

-0.3 0.6 -2.3 0.3 6.9 0.0 -0.6

July

0.3 0.8 -1.0 0.6 7.1 0.2 -0.7

Aug.(1)

0.2 1.2 -0.7 0.2 6.6 -0.4 0.0

Sept.(1)

0.7 0.4 2.8 0.0 6.9 0.6 2.6

Oct.

-0.3 0.1 -1.4 0.0 5.9 -1.1 -2.5

Nov.

0.3 1.0 0.1 0.1 5.7 0.2 3.8

Dec.

-0.1 -0.8 -0.8 0.3 4.8 -0.5 -1.1

Footnotes
(1) Some of the figures shown above and elsewhere in this release may differ from those previously reported because data for August 2011 have been revised to reflect the availability of late reports and corrections by respondents.

Stage-of-Processing Analysis

Finished goods

The December decline in finished goods prices is attributable to decreases of 0.8 percent in the 
indexes for finished energy goods and finished consumer foods. By contrast, prices for finished 
goods less foods and energy increased 0.3 percent.

Finished energy:  The index for finished energy goods fell 0.8 percent in December after inching 
up 0.1 percent in November. Leading this decline, gasoline prices dropped 2.3 percent. Lower 
prices for residential natural gas and diesel fuel also were factors in the decrease in the finished 
energy goods index. (See table 2.)

Finished foods:  Prices for finished consumer foods moved down 0.8 percent in December, the 
first decline since a 1.2-percent drop in May 2011. Seventy percent of the December decrease 
can be traced to the index for fresh and dry vegetables, which fell 11.1 percent. Lower prices for 
pork also contributed to the decline in the finished consumer foods index.

Finished core:  The index for finished goods less foods and energy rose 0.3 percent in 
December, the largest advance since a 0.6-percent increase in July 2011. Roughly thirty percent 
of the December rise is attributable to prices for light motor trucks, which moved up 0.9 percent.
  
Intermediate goods

The Producer Price Index for intermediate materials, supplies, and components fell 0.5 percent in 
December after rising 0.2 percent in November. Accounting for three-quarters of this broad-
based decline, the index for intermediate materials less foods and energy decreased 0.5 percent. 
Prices for intermediate energy goods and for intermediate foods and feeds moved down 0.3 
percent and 0.6 percent, respectively. In 2011, prices for intermediate goods rose 6.1 percent 
after increasing 6.3 percent in 2010. (See table B.)  

Intermediate core:  The index for intermediate materials less foods and energy moved down 0.5 
percent in December, the third consecutive decline. About two-thirds of the December decrease 
can be attributed to a 4.0-percent drop in prices for basic organic chemicals. The indexes for 
thermoplastic resins and plastics materials and for nonferrous mill shapes also contributed to the 
decline in intermediate core prices. (See table 2.)

Intermediate energy:  Prices for intermediate energy goods moved down 0.3 percent in 
December after rising 1.9 percent a month earlier. A major factor in this decline was the index for 
diesel fuel, which fell 3.8 percent. Lower gasoline prices also contributed significantly to the 
decrease in the intermediate energy goods index. 

Intermediate foods:  Prices for intermediate foods and feeds moved down 0.6 percent in 
December following a 0.6-percent advance in November. Accounting for nearly half of the 
decrease, the index for prepared animal feeds fell 2.2 percent. 

Crude goods

The Producer Price Index for crude materials for further processing decreased 1.1 percent in 
December. For the 3 months ending in December, prices inched up 0.1 percent following a 1.8-
percent rise from June to September. The December monthly decline is mostly attributable to the 
index for crude foodstuffs and feedstuffs, which fell 2.6 percent. Prices for crude energy 
materials edged down 0.1 percent and the index for crude nonfood materials less energy was 
unchanged.

Crude foods:  The index for crude foodstuffs and feedstuffs dropped 2.6 percent in December. 
From September to December, crude foods prices decreased 3.8 percent subsequent to a 2.9-
percent advance in the previous 3-month period. Accounting for over half of the December 
monthly decline, the index for corn fell 11.4 percent. Lower prices for slaughter steers and 
heifers and for slaughter hogs also were significant factors in the decline in the crude foods 
index. (See table 2.)

Crude energy:  Prices for crude energy materials inched down 0.1 percent in December. For the 
3 months ending in December, the crude energy materials index increased 8.0 percent after 
falling 0.3 percent from June to September. The December monthly decrease was the result of a 
4.6-percent drop in natural gas prices.

Crude core:  The index for crude nonfood materials less energy was unchanged in December. In 
the fourth quarter, the crude core index declined 6.7 percent compared with a 3.0-percent 
advance from June to September. In December, higher prices for iron and steel scrap and for 
corrugated wastepaper offset declining prices for nonferrous metals and corn.

Table B. Monthly and 12-month percent changes in selected price indexes for intermediate goods and crude goods, seasonally adjusted
Month Intermediate goods Crude goods
Foods Energy Except
foods
and energy
Change in
intermediate
goods from
12 months
ago (unadj.)
Foods Energy Except
foods
and energy
Change in
crude
goods from
12 months
ago (unadj.)

2010

 

Dec.

0.3 2.9 0.6 6.3 0.7 15.4 3.2 16.1

2011

 

Jan.

0.4 2.8 1.3 6.2 4.7 2.2 4.1 10.9

Feb.

2.6 4.2 1.2 8.1 6.8 0.3 2.2 16.5

Mar.

2.0 2.9 0.8 9.1 0.0 -1.2 -1.8 16.7

Apr.

1.8 1.8 1.2 9.7 3.8 4.5 2.9 23.8

May

-0.5 1.1 0.6 10.3 -4.2 -5.7 -1.4 22.7

June

0.5 -0.3 0.1 10.9 2.0 -4.0 1.3 26.1

July

0.2 -0.1 0.3 11.5 -0.3 -2.3 1.0 23.1

Aug.(1)

1.7 -2.1 -0.1 10.3 4.1 -4.9 1.0 18.6

Sept.(1)

0.8 2.1 0.2 10.5 -0.9 7.3 0.9 20.9

Oct.

-1.5 -2.6 -0.6 8.3 -1.8 -2.2 -4.3 12.6

Nov.

0.6 1.9 -0.4 7.7 0.5 10.5 -2.5 15.1

Dec.

-0.6 -0.3 -0.5 6.1 -2.6 -0.1 0.0 6.4

Footnotes
(1) Some of the figures shown above and elsewhere in this release may differ from those previously reported because data for August 2011 have been revised to reflect the availability of late reports and corrections by respondents.

Services Analysis

Trade industries:  The Producer Price Index for the net output of total trade industries moved 
up 0.2 percent in December after no change in November. (Trade indexes measure changes in 
margins received by wholesalers and retailers.) Leading the December advance were margins 
received by merchant wholesalers of durable goods, which climbed 1.4 percent. Higher margins 
received by discount department stores and by automotive parts and accessories stores also were 
factors in the rise in the total trade industries index. In 2011, the total trade industries index rose 
3.4 percent.

Transportation and warehousing industries:  The Producer Price Index for the net output of 
transportation and warehousing industries moved up 0.6 percent in December following a 0.2-
percent decline in November. Over seventy percent of this rise can be traced to prices received by 
the scheduled passenger air transportation industry, which climbed 2.7 percent. Higher prices 
received by the industries for long-distance general freight trucking (truckload) and local general 
freight trucking also contributed to the increase in the transportation and warehousing industries 
index. In 2011, the transportation and warehousing industries index moved up 6.1 percent.

Traditional service industries:  The Producer Price Index for the net output of total traditional 
service industries edged down 0.1 percent in December following a 0.1-percent advance in 
November. The index for the commercial banking industry led the December decrease, falling 0.9 
percent. Lower prices received by the industries for non-casino hotels and motels and for 
passenger car rental also were factors in the decline in the total traditional service industries 
index. In 2011, the total traditional service industries index increased 1.9 percent.
____________
The Producer Price Index for January 2012 is scheduled to be released on Thursday, 
February 16, 2012 at 8:30 a.m. (EST).



         Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be 
                                   Available on February 14, 2012

Each year with the release of PPI data for January, seasonal adjustment factors are recalculated 
to reflect price movements from the just-completed calendar year. The following information will 
be available on February 14, 2012 (two workdays prior to the release of PPI data for January 
2012 on February 16):

* Direct seasonal factors for commodity indexes for the year 2012,

* Recalculated seasonal factors for the last 5 years (2007-2011) for the commodity indexes, 

* Recalculated seasonal factors for the last 5 years (2007-2011) for the stage-of-processing 
indexes.

This routine annual calculation may result in revisions to seasonally adjusted indexes for the 
previous 5 years, which will be available on the BLS website. In addition, December 2011 
relative importance figures will be available on February 14, 2012.
      
To obtain this information, visit the PPI website at www.bls.gov/ppi or call the Division of 
Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at (202) 
691-7705.





                                    PPI Weights to be Updated
 
The Bureau of Labor Statistics will soon update the value weights used to calculate Producer 
Price Indexes to more accurately reflect recent production and marketing patterns. The new 
weights, which will be introduced in February 2012 with the release of January 2012 index data, 
will be based on shipment values from the year 2007. These value weights come from the Census 
of Manufactures, the Census of Mining, the Census of Services, and the Census of Agriculture. 
PPI weights have been based on 2002 census shipment values since January 2007.
 
All PPIs will be affected by this weight update, including all the industry net output indexes, as 
well as indexes for traditional commodity groupings. In addition, weights will be updated from 
the 2002 to the 2007 census for all stage-of-processing indexes, durability of product indexes, 
and special commodity-grouping indexes. This weight revision will not change any arithmetic 
reference bases for indexes, the dates when PPIs were set to 100.
 
The basic structures of the PPI commodity and stage-of-processing classification systems will not 
change as a result of the weight revision. The PPIs classified according to the North American 
Industry Classification System (NAICS), however, will be updated in February 2012 with the 
release of January 2012 index data to reflect 2012 NAICS definitions established by the U.S. 
Census Bureau. The weight update will also result in significant shifts in the relative importance 
of various industries and products. These shifts will impact aggregate indexes in a manner 
commensurate with the relative gains and losses in value weights from 2002 to 2007.
 
Commodity and stage-of-processing relative importance figures for December 2011 will be 
available on February 14, 2012, two business days prior to the release of January 2012 PPI data. 
This information will be available on the PPI website at www.bls.gov/ppi or by calling the 
Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public 
Information at (202) 691-7705.                          
                            



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