Producer Price Index Leaps 0.8% in November and 9.6% for 12-Months

The Producer Price Index is a family of indexes that measures the average change over time in the prices received by domestic producers of goods and services. Compiled by the U.S. Bureau of Labor Statistics, PPIs measure price change from the perspective of the seller.

The PPI measures prices at the producer level before they are passed along to final consumers. And by understanding price pressures and trends, investors can anticipate inflationary consequences in coming months.

On Tuesday, the U.S. Bureau of Labor Statistics announced that the Producer Price Index for final demand increased 0.8% in November. Further:

• Final demand prices moved up 0.6% in each of the 3 prior months

• On an unadjusted basis, the final demand index rose 9.6% for the 12 months ended in November, the largest advance since 12-month data were first calculated in November 2010

• In November, the index for final demand services rose 0.7%

• Prices for final demand goods increased 1.2%

• The index for final demand less foods, energy, and trade services moved up 0.7% in November, the largest rise since climbing 0.8% in July

• For the 12 months ended in November, prices for final demand less foods, energy, and trade services increased 6.9%, the largest advance since 12-month data were first calculated in August 2014

Final Demand

“The index for final demand services rose 0.7 percent in November, the eleventh consecutive advance. Over half of the broad-based increase in November can be traced to prices for final demand services less trade, transportation, and warehousing, which climbed 0.6 percent.

The indexes for final demand trade services and for final demand transportation and warehousing services also moved higher, rising 0.6 percent and 1.9 percent, respectively. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Leading the November increase in the index for final demand services, prices for portfolio management advanced 2.9 percent. The indexes for guestroom rental; securities brokerage, dealing, investment advice, and related services; fuels and lubricants retailing; airline passenger services; and transportation of freight and mail also moved higher. In contrast, margins for chemicals and allied products wholesaling fell 1.3 percent. The indexes for furnishings wholesaling and for bundled wired telecommunications access services also declined.

Within final demand goods in November, prices for iron and steel scrap rose 10.7 percent. The indexes for gasoline, fresh fruits and melons, fresh and dry vegetables, industrial chemicals, and jet fuel also moved higher. Conversely, prices for diesel fuel decreased 2.6 percent.”

More Data Later This Week

More economic data will be released later this week, including Retail Sales on Wednesday and Jobless Claims and Industrial Production on Thursday.

Sources: bls.gov